Brasília, August 21, 2003 (Agência Brasil - ABr) - The Minister of Finance, Antônio Palocci, remarked that the 2.5% reduction of the prime interest rate (Selic) to 22% per annum, determined on Wednesday (20) by the Central Bank, is the result of efforts in the areas of both fiscal and monetary policy over the course of the year. He underscored that the reduction "favors the economic process, and this is what we all desire."

He commended the Central Bank's initiative for being certain and cautious. "We follow the activities of the Central Bank, always giving the Bank autonomy to make its decisions. We believe that the Copom has the technical capacity to make these decisions in the best possible manner, and I continue to be convinced that it has been quite correct in the process of determining monetary policy during the course of the year. This is not just an opinion: it reflects the facts. If we observe current and future tendencies for inflation, we shall see that, fortunately, Brazil is emerging a winner in this area, which is one of our biggest economic problems," he said.

Palocci also recalled that other results of this economic policy are appearing now, such as the reduction in the net debt/GDP ratio and the decline in inflation. Nevertheless, he said that the fight against inflation is permanent, since inflation corrodes the wages of the poor and impedes economic growth, as well as disorganizing the initiatives of businessmen. (DAS)