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

To: Steve Fancy who wrote (22318)	5/23/2001 9:07:25 PM
From: Steve Fancy	Read Replies (1) \| Respond to of 22640

Brazil Ups Key Rate 50 Basis Pts To 16.75% - Estado Dow Jones Newswires Selic rate history: May 23 Apr 18 Mar 21 Jan 17 Dec 20 Mar/99 16.75% 16.25% 15.75% 15.25% 15.75% 45% By Anthony Dovkants Of DOW JONES NEWSWIRES SAO PAULO -- In a widely expected move to tame inflationary pressures, Brazil's central bank, citing the impact of an energy crisis, raised its key Selic interest rate by 50 basis points Wednesday. The bank's monetary policy committee, or Copom, raised the short-term interbank interest rate to 16.75% from 16.25%, the third 50 basis point increase in as many months after two years of falling rates. "The persistence of already existing pressures on the rate of inflation and the probable secondary effects of the energy crisis have prompted Copom to raise the Selic," the central bank said in a brief written statement after the decision. In a Dow Jones Newswires' survey of 19 economists, 18 predicted a 50 basis point hike in the Selic rate target to 16.75% while one foresaw a 75 basis point increase. The hike confirms that the central bank continues to pursue its 2001 inflation goal of 4%, said Odair Bate, chief economist at Lloyds TSB Group in Sao Paulo. That target is seen increasingly hard to reach following unusually high food prices earlier this year and rising international oil prices. Concern over troubled neighbor Argentina and the introduction of an electricity rationing program in Brazil have also pressured the real ($1=BRR2.345), which has fanned inflation by depreciating some 17% against the dollar since the beginning of the year. Brazilians are being asked to cut power consumption by 20% beginning in June. Government officials recently said the energy crunch will have a direct 0.15 percentage point impact on the key IPCA Broad Consumer Price Index in the coming months, as the government levies surcharges on households to encourage energy savings. The IPCA has risen 2% in the first four months of the year, consuming half the 2001 target of 4%. Inflation would have to average 0.24% monthly to reach 4% by the end of 2001. According to a central bank survey of 70 institutions last week, IPCA inflation expectations rose to 5% from 4.67% the previous week. The recent interest rate hikes and the energy rationing plan have dimmed Brazil's economic outlook this year and possibly next, if the electricity crisis drags on into 2002. Analysts have lowered their 2001 growth forecast to below 3% from 4.5% at the beginning of the year. Growth estimates had already been lowered to around 4% after neighboring Argentina's economic woes started to hurt the currency here in March. -By Anthony Dovkants, Dow Jones Newswires; 55-11-3813-1988; anthony.dovkants@dowjones.com The central bank said it had a neutral rate bias going forward.