Brazil's economic activity started the year with a slight
negative performance, central bank data showed on Monday,
highlighting the trend of economic slowdown amid high borrowing
costs.
The IBC-BR economic activity index, a leading indicator of gross domestic product, fell by a seasonally adjusted 0.04% in January from December. However, compared to the same month in 2022, the index grew by 3.03%.
The new government of leftist President Luiz Inacio Lula
da Silva has been consistently appealing for a reduction in the
benchmark interest rate to alleviate its negative impacts on
activity, while policymakers have argued that inflation
expectations are still diverging from official targets,
justifying a cautious stance.
The central bank has held rates steady at a six-year high of 13.75% since September, after pushing them up from a record low of 2% at March 2021 to battle rising consumer prices.
(Reporting by Marcela Ayres; Editing by Steven Grattan)
