The country’s central bank unexpectedly cut key interest rate from 12.5 percent to 12 percent. The cut has raised questions about the independence of the bank, after a number of politicians, including President Dilma Rousseff, who took office in January, called for a rate cut.
But bank officials said high debt and weaker growth in developed economies could impact on Brazil. The bank has raised rates five times this year in order to combat rising prices.
The Brazilian economy, Latin America’s largest, grew more than 7 percent in 2010 and is forecast to grow another five percent this year.