Brazil's Monetary Policy Committee (Copom) decided on Wednesday to cut the country's annual basic interest rate (Selic) by 1.5 percentage points, from 12.75 to a record low of 11.25 percent.

It was the sharpest cut in the Selic since November 2003, when the rate fell from 19 to 17.5 percent. In January, the rate had already suffered a one percentage point decrease.

The decision came only one day after the announcement of a 3.6 percent fall in the country's GDP in the fourth quarter of 2008. The results, which were worse than anticipations of most experts, increased the pressure for a more drastic interest rate reduction.

The Central Bank also indicated that the increasing inflation rate did not block the interest rate cut. The inflation rate in February, announced earlier Wednesday, reached a record high of 0.55 percent since June 2008, from 0.48 percent in January and 0.49 percent in the same period last year.

There were no any indications on whether the interest rate would have any modifications in the next Copom meeting due on April 28 to 29. But the Committee said it will follow closely the inflation rate change in the country.

Source:Xinhua