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‘Brazil capable of inflation control’
October 11, 2013, 4:49 am

Brazil now has the highest real interest rate in the world [AP]

Brazil now has the highest real interest rate in the world [AP]

Brazil is capable of controlling inflation as revealed by Wednesday’s move to raise the basic interest rate, Brazilian National Development Bank President Luciano Coutinho said Thursday.

The bank increased its Selic (short-term interest) rate by 50 basis points to 9.5 per cent.

Brazil now has the highest real interest rate in the world.

The Central Bank of Brazil has raised its benchmark interest rate for the fifth time in a row this year in an attempt to battle inflation.

Coutinho said the higher rate should not affect investment in Brazil.

On Brazil’s currency depreciation against the US dollar, he said a weaker Brazilian real is better for export.

“It will help Brazil recover the export capacity that it lost over the past few years,” he said.

A cheaper real would additionally help cut the current account deficit Brazil has been dealing with, he added.

The real rallied to its strongest close against the dollar in about four months Thursday trading at 2.175 to the dollar.

Coutinho also spoke of the possible recovery of the European and US economies, saying it would help achieve more balanced global economic growth and compensate the lower prices of commodities which make up a large share of Brazil’s exports.

Source: Agencies

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