 |
||
| A union activist wearing a mask in the likeness of Brazil's Economy Minister Guido Mantega protests unemployment at the headquarters of the Central Bank in Brasilia. |
||
Brazil's central bank reduced its benchmark interest rate a full point to 12.75 percent on Wednesday, its biggest cut since December 2003, as industry and labor leaders called for eased lending to boost the country's stalling economy.
Policy makers slashed the so-called Selic rate by 1 percentage point to its lowest level since March 2007, when Brazil was still enjoying a boom that ended abruptly with the global economic crisis late last year. The cut was Brazil's first since September 2007.
Economists surveyed by the bank predicted that it will continue cutting the Selic throughout the year, bringing it to 11.25 percent by 2010 to revive rapidly slowing growth.
Brazil's economy, Latin America's largest, was once expected to expand 4 percent or more in 2009. Economists surveyed by the bank now forecast 2.5 percent growth for the year, while some analysts predict an even greater slowdown as the world economic crisis stalls demand for the commodity exports on which so many Brazilian companies rely.
Union members, who protested by the thousands on Sao Paulo's streets ahead of the bank's decision Wednesday, criticized the move as too conservative. Labor leaders had sought a 2 percentage point rate cut to spur lending and production and slow layoffs.
"A reduction of 1 percent isn't much," said Artur Henri, head of the Central Workers Congress.
One of the nation's top big business lobbies, the National Confederation of Industry, called the cut "rational and pragmatic," the Agencia Estado news service reported.
Brazil lost 654,000 jobs in December, more than any month since May 1999, the government said this week. Unemployment reached 7.6 percent in November, and December's jobless rate is due to be announced on Thursday.
Companies that produce everything from cars to minerals to food have been laying off employees, while others have sent workers on paid vacations from idle plants because Brazilian labor laws make firings too costly.
The central bank's monetary policy committee had resisted cutting rates as inflation persisted despite Brazil's slowing growth. But recent data shows price gains have eased, with inflation now predicted to dip to 4.9 percent in 2009, according to economists surveyed by the bank.
Five of the committee's eight members voted for Wednesday's 1 percentage point cut, while three favored a reduction of 0.75 percentage points, the bank said.
(AP)
