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By Rodrigo Vigo Gaier
RIO DE JANEIRO, Nov 22 (Reuters) - Brazil’s record low interest rates are expected to fall further, Economy Minister Paulo Guedes said on Friday, which, along with a rebound in economic growth, will help spur long-term investment in the country.
Guedes said Brazil is currently growing at a rate of “well over” 1% and that the pace of growth will “definitely” be more than twice that next year, thanks to the monetary boost and the government’s continued drive to reign in public spending.
Brazil’s central bank has slashed its benchmark Selic rate a by a total of 150 basis points at its last three policy meetings to a record low 5.00%, and bank president Roberto Campos Neto said this week another 50 basis point cut is likely.
Speaking at an event in Rio de Janeiro, Guedes said several businessmen have told him that the conditions are being laid for investment to be unleashed into the economy, which the government is opening up rapidly but responsibly.
Latin America’s largest economy is expected to grow at around 1% this year for the third year in a row, the slowest ever recovery from recession, economists note.
Real interest rates, taking into account inflation, are currently running at around 2.0%, Guedes said, a level that will continue to fall as the government further reduces its budget deficit.
The government is on course to post a deficit of just over 70 billion reais ($16.7 bln) this year, Guedes said, well below its official goal of 139 bln reais and even lower than the 80 bln reais floated by Economy Ministry officials earlier this week.
Guedes also said free trade negotiations with China will take over two years. He has consistently said Brazil is open to striking trade deals with any partner, but also insisted on Friday that its national industry will be protected.
$1 = 4.19 reais Reporting by Rodrigo Viga Gaier Writing by Jamie McGeever Editing by Chizu Nomiyama and Steve Orlofsky