Large banks that provide credit for capital-goods investment can deduct as much as 20 percent of reserve requirements for their so-called “on call” deposits that can be withdrawn at any time, the central bank said in a statement today. This change applies to banks with a minimum of 6 billion reais ($2.9 billion) in total equity, and the central bank said it expects the measure will create 15 billion reais in fresh credit.
The move signals a shift toward macro-prudential measures to spark growth in the world’s sixth-largest economy, said Pedro Tuesta, senior Latin America economist at 4Cast Inc. On Dec. 23, President Dilma Rousseff called on the country’s businesses to increase investments after authorities this year cut taxes and announced infrastructure spending aimed at making Brazil’s economy more competitive.
“This is a targeted measure,” Tuesta said in a telephone interview from Washington. “They are trying to focus efforts of monetary easing to help recovery in investment, which has been the weakest link in the recovery.”
Falling business confidence caused investment to drop five straight quarters through September.
Earlier this month, the central bank reduced reserve requirements on short dollar positions held by local banks to buoy the real. In September, the central bank reduced reserve requirements to free as much as 30 billion reais in credit one week after Rousseff criticized banks for overcharging on loans.
The central bank on Dec. 20 cut Brazil’s 2012 growth forecast to 1 percent, after the economy expanded in the third quarter at half the pace of analysts’ forecasts. Still, Brazil is creating the conditions to grow 4 percent next year, Finance Minister Guido Mantega said earlier this month.
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