IMF determined hike interest rate hike, sources say
Washington, 19 - The government's decision to rise interest rates yesterday was basically determined by the International Monetary Fund (IMF), sources said. According to analyses being carried out in Washington, representatives from countries composing the Fund's council considered that a reduction in Brazilian interest rates could generate a strong capital flight, see related story.
According to these sources, industrialized countries became apprehensive whenever a reduction in the cost the Brazilian currency, the real, was mentioned. In relation to the impact of the hike in interest rates on the Brazilian debt securites, the IMF pondered the situation is temporary, thus, a bearable one.
The IMF has not as yet defined its resident representative in Brazil. However, the IMF representation should not substitute the Fund's missions to the country, which will continue paying Brazil a quarterly visit in order to check if it is meeting all the targets established in last November's accord. (Cynthia Decloedt, special envoy)
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