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Brazil Central Bank Lowers Rates

April 15, 1999

RIO DE JANEIRO, Brazil (AP) _ The Central Bank lowered its benchmark interest rate from 39.5 percent to 34 percent Wednesday amid optimism Brazil is emerging from its economic crisis.

Falling inflation figures and a ``slow but consistent″ return of foreign investment prompted the cut, said Central Bank monetary policy director Luiz Fernando Figueiredo.

It is the third time the bank has lowered rates in three weeks. It had raised the benchmark to 45 percent in early March to ward of the threat of inflation.

Many said Brazil’s currency devaluation in January would spark massive inflation. But last week the University of Sao Paulo research unit said it should be under 10 percent in 1999.

The economy is also seeing other positive signs, including the strengthening of the currency, the real, and bullish stock markets.

Brazil has targeted a yearend interest rate of 29 percent to stimulate economic growth and generate jobs.

It made the target in conjunction with the International Monetary Fund, which has put together a $41.5 billion financial aid package for Brazil with other lenders.

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