Brazil cuts interest rate by half-point, first in 3 years

BRASILIA, Aug 03 (AFP): Brazil's central bank slashed its key interest rate by a larger-than-expected half-point Wednesday, making its first rate cut in three years as emerging economies start to turn toward monetary easing.
The bank's monetary policy committee said its members had voted five to four to lower the benchmark Selic rate to 13.25 per cent, kicking off an easing cycle long sought by leftist President Luiz Inacio Lula da Silva, who insisted high interest rates were stunting the growth of Latin America's biggest economy.
The four dissenting votes-unusual for the committee, which tends to vote unanimously-were for a smaller, quarter-point cut, in line with most analysts' forecasts.
The committee "evaluated the alternative of reducing the benchmark interest rate to 13.5 per cent, but considered it appropriate to adopt the pace of a 0.5 per centage point cut given the improving inflation situation," it said in a statement.
It said it was the start of a "gradual cycle of monetary loosening," and that its members "unanimously" anticipated another half-point cut "in the coming meetings," the next of which will conclude on September 20.
Finance Minister Fernando Haddad hailed the decision.
"Inflation is under control, we're planning for the economy's future. Investors, consumers and families are going to be able to plan for a Brazil of fiscally, socially and environmentally sustainable growth," he said.
"We are committed to fighting inflation and also to fiscal responsibility and the (monetary) adjustment that's being undertaken, which will get easier from here."