Brazil announces new $4.5-bn credit stimulus

AFP
Security guards stand by the Central Bank building entrance in Sao Paulo, Brazil, on March 7, 2012
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Security guards stand by the Central Bank building entrance in Sao Paulo, Brazil, on March 7, 2012 (AFP Photo/Yasuyoshi Chiba)

Sao Paulo (AFP) - Brazil's central bank said Wednesday it would ease banks' reserve requirements for the second time in less than a month, freeing up $4.5 billion to stimulate lending and boost the sluggish economy.

Under the new rules, banks will be allowed to use up to 60 percent of reserves for credit operations, an increase from the 50-percent limit announced on July 25.

The bank said the move would free up an additional 10 billion reals ($4.5 billion) in credit.

It comes on the heels of the July 25 stimulus measures, which the bank said would free up $13 billion in additional credit.

The maneuvers come as the clock ticks down to Brazil's October presidential elections.

Incumbent Dilma Rousseff is seeking a second four-year term, but battling to convince voters she can inject new life into an economy that has averaged 2.1-percent growth during her time in office, down from 7.5 percent in 2010, the year she won election.

Finance Minister Guido Mantega also announced a new credit program to boost the real estate sector.

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