21 Oct 2011

Interest rate lowered by Brazil

6:04 am on 21 October 2011

The Central Bank of Brazil has cut its key interest rate to 11.5% from 12%, citing a continuing slowdown in the global economy.

The bank previously cut its rates at the end of August, after raising them five times this year to combat rising prices.

Inflation rose to 7.3% in September - the highest in more than six years. The bank's target inflation rate is currently 4.5%.

Last month, the bank cut its economic growth forecast for 2011 to 3.5%. The BBC reports this is less than half the 7.5% growth recorded last year.

In February the government announced spending cuts worth 50 billion reals ($US28 billion).