Brasília, January 19, 2004 (Agência Brasil - ABr) - The Monetary Policy Committee (Copom) will meet for the first time this year on the 20th and 21st to fix the prime interest rate (Selic), which has been set at 16.5% since last month.

Recent reductions in the country risk premium, which closed on Friday (16) 434 base points above the quotation for US Treasury bonds, the appreciation of C-Bonds above their par value, the appreciation of the Brazilian currency in relation to the US dollar, and the economy, which is still weak, are concrete factors that favor the continuation of the process of monetary easing. The only negative note is the jump in inflation in the transition from 2003 to 2004, which should determine a more conservative cut in the interest rate.

A weekly survey conducted by the Central Bank's Department of Investor Relations (Gerin) indicates that the increase from 0.34% to 0.52% in the Broad Consumer Price Index (IPCA) between November and December was a temporary phenomenon, propelled mainly by education costs, as a result of early payment of enrollment fees for the 2004 school year. (DAS)