As Europe’s crisis deepens, President Dilma Rousseff’s government is taking steps to reinvigorate the economy with a mix of tax cuts, interest rate reductions and looser bank lending requirements.
Industrial output was the part of the economy hit the hardest by the deepening debt crisis in Europe, posting in September the second-biggest decline since 2008. Production sank 1.9 percent in September and 0.6 percent in October
The central bank’s rate increases in the first half of 2011 aimed to cool down the fastest inflation in six years and an economy that grew at a 7.5 percent pace in 2010, the fastest in two decades. Policy makers began slashing rates in August in the most abrupt reversal in monetary policy since 1999, citing a substantial deterioration” in the global economy.
Bank lending growth in October slumped to its lowest level since January, the central bank said, as a bank workers’ strike interrupted operations and the interest-rate increases began to work their way through the $2.1 trillion economy, the world’s sixth biggest.