Rio de Janeiro, 28 (Agência Brasil - ABr) - The lowering of the interest rate to 18.75% a year - which was decided at the most recent meeting of the Central Bank's Monetary Policy Committee (COPOM) in February - has opened the possibility for additional rate reductions. This has aroused a debate on how long this will take. In IPEA's viewpoint, the answer to this question depends on the anticipated behavior of inflation in upcoming months, as well as on the degree of nervousness demonstrated by foreign capital flow and by the currency exchange market due to the upcoming October election.

According to the Institute of Applied Economic Studies (IPEA), the still latent concerns are Argentina and the level of global economic activity, with greater risks in relation to Japan. On the domestic market, the arguments that favor an interest rate reduction are a growth in the production and employment levels and the stabilization of the public debt. On the other hand, the control of inflation continues to demand caution due to the uncertainties that remain. (MW)