Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Telebras (TBH) & Brazil -- Ignore unavailable to you. Want to Upgrade?

To: md1derful who wrote (21064)	6/20/2000 11:13:00 PM
From: Steve Fancy	Respond to of 22640

UPDATE 1-Brazil cuts key Selic rate to 17.5 pct Reuters, 06/20/2000 20:01 By Phil Stewart BRASILIA, June 20 (Reuters) - Brazil's Central Bank unexpectedly cut its key Selic interest rate to 17.5 percent from 18.5 percent on Tuesday, citing low inflation. The bank also signaled that monetary policy could be eased by announcing a bias to cut rates in the future. The move gives the bank's chairman the right to cut rates at will between monthly meetings of the Monetary Policy Committee (Copom). "The recent inflation result changed the Copom's expectation for inflation significantly," the Central Bank's monetary policy director, Luiz Fernando Figueiredo, said after Tuesday's Copom meeting. Economists had widely expected the Central Bank to act cautiously, holding rates steady for a third month in a row in order to ensure that the U.S. economy is indeed slowing down and that rates there have stopped rising. "I think it is surprising but it will be welcome news," said Siobhan Manning, Latin American debt strategist at PaineWebber. "The external backdrop is much more favorable than just a month ago." Twenty economists surveyed by Reuters late last week unanimously forecast an unchanged rate, while 17 expected a bias to lower rates. The Central Bank last cut rates in March by 0.5 percentage points, also shortly after announcing a downward bias -- which allows the bank's chairman to cut the Selic between meetings. The external environment, namely high oil prices and rising U.S. rates, have straight-jacketed monetary policy makers since the beginning of the year, lowering expectations of larger rate cuts for 2000. But Brazil's inflation remains under-toe, posting the lowest levels of growth in the first quarter since 1980, despite an economic expansion of 3.08 percent in the period. In May, prices were actually flat. And a new drop in oil prices and signs that OPEC will likely boost production, bringing prices down further fueled optimism in Brazil where the state-owned oil company imports about 40 percent of all the oil consumed. Although economists had expected caution ahead of next week's meetings of the U.S. Federal Reserve, the U.S. economy appears to be slowing. The Fed has raised interest rates six times in the last year to battle inflation. "Fears of aggressive rate hikes have passed," Manning said. At the same time, the government has taken in more tax revenue while trimming its nominal budget deficit in the first quarter to 1.7 percent of GDP, a stunning drop from the 23.7 percent registered in the same period last year. On Monday, the Central Bank reported a primary budget surplus for the first four months of the year of 17.3 billion reais, allowing Latin America's economic giant to surpass an end-June IMF budget target with more than 1 billion reais to spare. The good news helped Brazil launch 750 million euros of new five-year bonds on Tuesday, which were greeted by optimism in the market as analysts said they expected a credit rating upgrade and another Brazil issue on the horizon. The Central Bank held rates steady for two months after cutting the Selic to 18.5 percent in March from 19.0 percent, also shortly after announcing a downward bias. Copyright 2000, Reuters News Service