Brasilia - After a three-hour meeting yesterday the Monetary Policy Committee decided to lower the country's benchmark interest rate (Selic) from 16.50% to 16.25%. It was the first reduction of the interest rate this year.

However, the decision was not unanimous. The vote was 6 to 3.

The majority opinion stated that present inflation rates do not compromise government economic targets.

The reduction of 0.25 percentage points was praised by the productive sector. The president of the National Industrial Confederation (CNI), Armando Monteiro, called it "positive, although modest, signalling a return to falling interest rates interrupted in January."

Some banks have already reduced monthly interest rates. The Banco do Brasil announced a reduction beginning this Thursday. Its credit card and special check interest rates, which varied between 2.49% and 7.49%, will fall to between 2.49% and 7.33%.

The Federal Mortgage and Loan Bank (Caixa) will decide today on a reduction.

Last year, with the Selic at 26.5%, the Luiz Inacio Lula da Silva administration began a series of interest rate reductions in May and extending to December, when the rate fell to 16.50%.

A more detailed explanation of yesterday's Copom decision and the reasons for it will be released in a week when the minutes of the meeting are made public. (AB)