Inflation Report
Sao Paulo’s FIPE weekly consumer prices rose 0.41 percent in the four weeks through May 23, according to a report from the Foundation Economics Research Institute in Sao Paulo today. The median forecast of 24 analysts in a Bloomberg News survey was for an increase of 0.44 percent.
Default rates in Brazil returned to levels seen during the 2009 financial crisis as President Dilma Rousseff stepped up measures to boost credit growth and lower borrowing costs.
Policy makers will cut the 9 percent target lending rate to 8.5 percent at a meeting next week, according to the median forecast of 19 analysts in a Bloomberg News survey. The central bank said at its April 17-18 meeting that further cuts to the benchmark rate will be carried out “with parsimony.”
Average default rates in April rose to 5.8 percent, matching the level seen in February and the highest since November 2009, the central bank said in a report distributed today in Brasilia. Outstanding credit rose 1.2 percent last month to 2.1 trillion reais ($1 trillion).
The average rate banks charged for loans fell to 35.3 percent in April as lenders from Banco do Brasil to Itau Unibanco Holding SA (ITUB4) announced cheaper credit lines in response to criticism from Rousseff that they’re not doing enough to reduce loan rates.