Brazil bank lending slows in March from February

Lending growth in Brazil slowed in March from February as the government worked to brake credit expansion and contain inflation.

Outstanding loans BRLEND=ECI in Brazil’s banking system rose 1.0 percent in March from February, the central bank said on Wednesday, easing from from 1.3 percent growth in February over January.

Loan delinquencies as a proportion of total loans, or the average loan default rate, stayed at 4.7 percent in March, the same as February.

Relatively easy credit last year helped fuel economic growth of 7.5 percent, making Brazil a standout performer among major economies.

But that surge of credit helped push inflation to a six-year high by the end of 2010. Since then inflation has edged dangerously close to the ceiling of a government target.

To clamp down on consumer price pressures, the central bank has raised interest rates three times this year, most recently a hike to 12 percent from 11.75 percent last week.

Policy-makers have also used other tools, such as limiting how much banks can lend.

President Dilma Rousseff has said repeatedly this week that her government will not allow prices to run out of control.

The central bank this year is targeting inflation of 4.5 percent, plus or minus 2 percentage points. The benchmark IPCA inflation index reached 6.44 percent in the year through mid-April.