Commercial banks have decided to keep the benchmark interest rate at 19% for February, despite the recent reductions implemented by the BoM in its monetary policy, according to the newspaper O País.
The decision comes after the BoM’s Monetary Policy Committee (CPMO) announced on 27 January a cut in the monetary policy interest rate, known as MIMO, from 12.75% to 12.25%. In addition, the mandatory reserve ratio was reduced from 39 per cent to 29 per cent, with the aim of increasing liquidity in the financial system.
Despite these measures, commercial banks opted to keep the reference interest rate used in variable rate credit operations unchanged.
This rate is applied to new contracts, renewals and credit renegotiations between financial institutions and their clients. The final amount for each operation can also be adjusted with an additional margin (spread), depending on the risk associated with each client and type of credit.
The banking sector’s decisions suggest that, for the time being, the reduction in the MIMO rate and compulsory reserves has had no immediate impact on commercial credit conditions, keeping the cost of financing high for companies and individuals.