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Four Reasons for Brazil’s Credit Dysfunction – and How to Fix It

January 09, 2018

Brazil’s Central Bank raised eyebrows in December when it lowered its target interest rate to 7 percent. That’s high by global standards, and about average for other major emerging markets, but it was a milestone for Latin America’s biggest economy: 7 percent is the lowest key interest rate in Brazil’s history.

That Brazil’s all-time lowest interest rate is so high shows just how off-kilter the country’s credit markets have become. The costs for Brazilian consumers and small businesses to take out loans are among the highest in the world. At 51 percent per year, Brazil’s lending...

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