Brazil's central bank tightens credit, orders higher reserves

02/1/2008 | Bloomberg1

Brazil's central bank moved to control inflation by increasing bank reserve requirements. The central bank directed banks operating in the country to reserve as much as 25% of the interbank deposits made by leasing companies. Leasing companies sold about 71% of the $26.5 billion of domestic bonds sold in Brazil in 2007 as they financed the purchase of consumer durable goods like cars. "The central bank is closing a fundraising window that was favorable and cheap for banks," said asset manager Regis de Abreu of Mercatto Gestao de Recursos.

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