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Brazil Credit for Big Business ‘Moderately Restrictive’

Credit availability for large Brazilian companies was “moderately restrictive” in the final three months of last year and will remain so in the first quarter, said Carlos Hamilton, the central bank’s director of economic policy, citing a survey of 22 financial institutions.

The survey shows that the outlook for credit for large businesses was affected by liquidity, Hamilton said at an event in Fortaleza. The outlook for credit for smaller enterprises and consumers is also slightly restrictive in the first quarter because of delinquency rates, Hamilton said, citing the survey.

The survey, taken from Dec. 12 to Dec. 23, asked bank executives how they viewed the credit market for different industries.

Hamilton reiterated that credit will expand 15 percent this year, after growing 19 percent in 2011.

Slower credit growth this year is one of the factors that will help the central bank bring inflation back to its 4.5 percent target, according to the minutes of the Jan. 17-18 board meeting. Still, the bank’s 2012 inflation forecast is 4.7 percent, according to its reference scenario published in December.

Inflation “will converge to target in 2012 in our view,” Hamilton told reporters in Fortaleza after the event. “The forecast doesn’t point to the target, but our view is that the balance of risks for inflation are favorable.”

There is a bigger chance that consumer prices will rise less than 4.7 percent this year than the opposite, Hamilton said.

On Jan. 26, the central bank said there was a high probability it would reduce the benchmark interest rate to less than 10 percent from 10.5 percent.

Traders are betting the bank will cut its benchmark rate by 0.5 percentage point for a fifth straight meeting in March, to 10 percent, and to 9.25 percent by July, according to Bloomberg estimates based on interest rate futures contracts.

To contact the reporter on this story: Andre Soliani in Brasilia at asoliani@bloomberg.net.

To contact the editor responsible for this story: Joshua Goodman at jgoodman19@bloomberg.net.

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