Bloomberg the Company & Products

Bloomberg Anywhere Login

Bloomberg

Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.

Company

Financial Products

Enterprise Products

Media

Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000

Communications

Industry Products

Media Services

Follow Us

Brazil Mantega Denies Meeting to Discuss Savings Rule Change

April 20 (Bloomberg) -- Brazilian Finance Minister Guido Mantega denied a newspaper report that he was called to a meeting on April 23 to discuss changes to rules guaranteeing returns for savings accounts. Yields on interest rate futures pared losses.

Belo Horizonte-based newspaper Estado de Minas reported today that President Dilma Rousseff wants to cut the benchmark interest rate to 8 percent by July, which would push yields on local bonds below government-mandated returns on savings accounts known as poupanca, after taking into account taxes and fees collected by asset managers.

“There is no meeting about poupanca,” Mantega told reporters in Washington today. “With interest rates at 9 percent there isn’t a need to change the poupanca.”

The central bank this week cut the benchmark rate 0.75 percentage point to 9 percent and left the door open for further cuts, saying that inflation risks are “limited”. The government will need to “address very quickly” the rules on savings accounts if it plans to cut the Selic rate below 8.5 percent, said Jankiel Santos, chief economist at Espirito Santo Investment Bank in Sao Paulo.

“Below 8.5 percent the saving accounts yield starts to become more attractive than the Selic rate,” Santos said in a telephone interview. ‘If they go further than 8.5 percent we may see investment migration from government bonds to savings accounts.’’

Yields on interest rate futures contracts pared losses after Mantega’s remark, as traders trimmed bets on deeper rate cuts.

Yields on the contract due in January 2014, after sliding as much as eight basis points, dropped four points, or 0.04 percentage point, to 8.86 percent at 2:10 p.m. in Sao Paulo.

Traders are betting the central bank will reduce the Selic rate to at least 8.75 percent in May, matching the record low it reached in July 2009.

Santos said he isn’t sure whether the switch from government bonds to savings accounts would happen in practice.

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

Please upgrade your Browser

Your browser is out-of-date. Please download one of these excellent browsers:

Chrome, Firefox, Safari, Opera or Internet Explorer.