Brazil’s finance minister Mantega unveiled today a set of measures to boost bank lending and stoke the economy, including the lowering of the IOF tax on personal loans and offering tax breaks for selected sectors of the economy.

At the same time, the BNDES stands ready to offer export lines should private sources dry up. “The yellow light has flashed”, a BNDES official told Valor.

The INA, an index of activity from the Sao Paulo industrial federation, fell 0.4% in October. As a result, Itau has lowered its forecast for October industrial production to -0.2% (from zero).
All these bad data may be a justification to Brazil’s central bank lowering the Selic rate by 50 bps to 11.0%, yesterday (expected to stand at 9% in 2012). It remains to be seen what its effects will be on inflation.

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