RIO DE JANEIRO (Dow Jones)--Higher interest rates in Brazil won't impede economic growth in Latin America's largest economy, Finance Minister Guido Mantega said Thursday.
"The restrictive monetary measures being undertaken in 2011 already started in 2010," Mantega said during a conference call with foreign journalists. "They are not going to impede economic growth but moderate the pace of growth to ensure that domestic demand is not as strong."
Brazil's economy slowed in the second half of 2010 after the Brazilian Central Bank raised interest rates by two percentage points early in the year. Inflationary pressures at the end of 2010 also caused the central bank to kick off 2011 with two consecutive rate hikes--the latest, made Wednesday, pushed the Selic base interest rate to 11.75%.
Despite the uptick in local interest rates, available credit should grow between 12% and 13% in 2011, the finance minister said. Capital markets should also expand to allow Brazilian companies ample access to financing for investments.
"That will allow us to guarantee a reduction in inflation as well as sustainable economic growth," Mantega said.
The recent turmoil in the Middle East and North Africa, which has sent international oil prices above $100 a barrel, also should not have a direct impact on the Brazilian economy, the finance minister said. Mantega noted that the country is self-sufficient in oil, only importing a small number of oil products.
"However, a greater elevation in oil prices could cause a deceleration in economic growth in the European Union and the U.S., which could affect trade between Brazil and those countries," Mantega said.
Source: http://online.wsj.com
"The restrictive monetary measures being undertaken in 2011 already started in 2010," Mantega said during a conference call with foreign journalists. "They are not going to impede economic growth but moderate the pace of growth to ensure that domestic demand is not as strong."
Brazil's economy slowed in the second half of 2010 after the Brazilian Central Bank raised interest rates by two percentage points early in the year. Inflationary pressures at the end of 2010 also caused the central bank to kick off 2011 with two consecutive rate hikes--the latest, made Wednesday, pushed the Selic base interest rate to 11.75%.
Despite the uptick in local interest rates, available credit should grow between 12% and 13% in 2011, the finance minister said. Capital markets should also expand to allow Brazilian companies ample access to financing for investments.
"That will allow us to guarantee a reduction in inflation as well as sustainable economic growth," Mantega said.
The recent turmoil in the Middle East and North Africa, which has sent international oil prices above $100 a barrel, also should not have a direct impact on the Brazilian economy, the finance minister said. Mantega noted that the country is self-sufficient in oil, only importing a small number of oil products.
"However, a greater elevation in oil prices could cause a deceleration in economic growth in the European Union and the U.S., which could affect trade between Brazil and those countries," Mantega said.
Source: http://online.wsj.com
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