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

To: Steve Fancy who wrote (21102)	7/7/2000 11:37:46 PM
From: Steve Fancy	Read Replies (2) \| Respond to of 22640

UPDATE 1-Brazil Central Bank cuts Selic rate to 17 pct Reuters, 07/7/2000 18:53 (Adds analyst quote, details, background throughout) BRASILIA, July 7 (Reuters) - Brazil's Central Bank cut the Selic interest rate to 17 percent from 17.5 percent Friday, saying low inflation had allowed it to ease the key rate for the second time since late June. The bank cut the Selic to 17.5 from 18.5 percent on June 20 and adopted a downward bias then that allowed it to take Friday's action outside of the scheduled monthly meetings of its Monetary Policy Committee. "Considering the favorable evolution of internal and external factors that affect future inflation (the bank decided to cut rates Friday)" said the Central Bank's monetary policy director Luiz Fernando Figueiredo. There has been persistent talk in financial markets since June 20 that the Central Bank would soon spring another cut on Latin America's largest economy. "I'm not entirely surprised. It seems that the Central Bank in its recent history has shown itself to be opportunistic in monetary policy," said Constantin Jancso, an economist at MCM Consultores in Sao Paulo. "When it sees a chance to lower rates, it tends to do so and, when markets get worried, it stays put." Figueiredo said the bias would remain downward until the next monthly meeting on July 20, meaning rates could be cut again. Inflation indicators have shown sharp downward tendencies recently and, above all, the Fipe research group announced this week that its inflation index for the industrial hub of Sao Paulo had fallen to its lowest levels since 1939 in the first half of this year. A lower Selic rate -- which sets the benchmark for consumer and commercial rates in Brazil -- should help speed up Brazil's economic recovery. The government has forecast 4 percent growth in gross domestic product this year after an expansion of one percent in 1999. Economic indicators have shown that Brazil's recovery is gathering steam. Brazil's Vehicle Producers Association (Anfavea) announced this week that the sector produced 25 percent more vehicles and sold 17 percent more in the first half of this year than in the same period of 1999. Copyright 2000, Reuters News Service