Brasília, October 23, 2003 (Agência Brasil - ABr) - The predictions were confirmed. On Wednesday (22), the Central Bank's Monetary Policy Committee (Copom) decided to lower the prime interest rate (Selic) from 20% to 19% per year. The decision was unanimous, and the rate continues without the so-called bias, which means that it should only be altered on November 18-19, when the members of the committee are scheduled to meet again.

In a note, the Central Bank informs that the Committee, "after an analysis of the economic situation, encompassing activity levels, inflation trends projected into the future, the evolution of monetary aggregates, public finances, the balance of payments, monetary liquidity, and Central Bank operations, assessed the guidelines of monetary policy in consonance with the observed data."

This is the fifth consecutive reduction in the Selic rate, which has fallen 7.5% over the past five months. The Copom began to reduce the rate in June, when it was lowered 0.5%, from 26.5% to 26% per year. In July, interest rates declined again, by 1.5%, to 24.5% per year. In August, the rate was reduced from 24.5% to 22.%, and, in September, it was lowered to 20% per year.

In theory, changes in the Selic affect the lives of all Brazilians, because the rate serves as a reference for interest rates charged on the market by banks and other financial instititions; in other words, it can indicate an increase or decrease in interest rate adjustments on installment purchases, personal loans, and all other modes of credit.

The Selic rate is used by institutions that need to obtain funds on the market; it, therefore, determines the "price" of the money that will be borrowed. (DAS)