“Brazil’s central bank reduced reserve requirements to free up 30 billion reais ($14.9 billion) in credit as President Dilma Rousseff pushes banks to lower borrowing costs in the world’s second-biggest emerging market.
The measure came a week after Rousseff criticized Brazilian banks for overcharging for loans. Over the past year, the central bank has cut its benchmark rate by 500 basis points, more than all Group of 20 nations, though borrowing costs are still among the highest in the world. The average interest rate charged for personal loans stood at 36 percent in July.
“It was necessary for the reserve requirements to accompany structural changes” in the Brazilian economy, Aldo Mendes, the central bank director in charge of monetary policy, said in a phone interview after the measure was announced Sept. 14. “If the supply of credit increases, everything indicates that interest rates will fall.”
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