MercoPress. South Atlantic News Agency

Brazilian basic rate remains unchanged at 16,5%

Brazil's Central Bank Monetary Policy Committee, Copom, decided this Wednesday in its monthly meeting to keep the basic reference interest rate unchanged at 16,5%.

In its first meeting of 2004, Copom voted 8 to 1, interrupting a seven months consecutive cut spree.

Most market analysts and financial experts expected a half a point cut in January following December's inflation timid revival compared to the previous month.

Copom seems to have adopted a more conservative attitude and won't be able to consider the issue until February's meeting.

The high interest rates of the President Lula da Silva administration particularly during the first half of 2003 helped combat inflation but also limited economic expansion to 0,5% for which the Central Bank tight money policy was severely criticized by domestic market industries and from the president's same party. Inflation in 2003 in Brazil averaged 10%.