Lula Urges Further Rate Cuts to Aid Flood-Hit Rio Grande do Sul

Brazilian President Luiz Inacio Lula da Silva urged the central bank to keep lowering interest rates to support flood-stricken Rio Grande do Sul. The government introduced 15 billion reais in new credit lines for affected companies. Lula has criticized high interest rates and seeks collaboration from central bank chief Roberto Campos Neto.

Brazilian President Luiz Inacio Lula da Silva said on Wednesday he hopes the country's central bank will keep lowering interest rates to help flood-hit Rio Grande do Sul state, as his administration unveiled credit lines for affected companies.

Latin America's largest economy announced a total 15 billion reais ($2.89 billion) in new credit lines for firms in Rio Grande do Sul, where recent floods have killed nearly 170 people and displaced more than 580,000. Lula said at an event to unveil the new measures that he would like central bank chief Roberto Campos Neto to "collaborate" with government efforts to support the people of Rio Grande do Sul.

Lula has publicly criticized Campos Neto for what he considers excessively high interest rates ever since taking office in early 2023. His latest call on the monetary authority to lower rates comes as markets price in a nearly 90% likelihood of a pause in Brazil's ongoing easing cycle in June.

The monetary authority reduced its benchmark interest rate by 25 basis points to 10.50% earlier this month, after six straight cuts twice that size. ($1 = 5.1940 reais)