Reuters: US Dollar Report: UPDATE 1-Brazil finmin says key rate, spreads should keep falling

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UPDATE 1-Brazil finmin says key rate, spreads should keep falling May 4th 2012, 17:24 Fri May 4, 2012 1:24pm EDT SAO PAULO May 4 (Reuters) - Brazil's central bank benchmark interest rate needs to continue falling in order to reduce interest rate spreads in the banking system, Finance Minister Guido Mantega told reporters on Friday. President Dilma Rousseff's government has made a priority of reducing Brazil's bank spreads, or the difference between what they pay out in interest to depositors and what they charge in interest on loans, which are among the world's highest. Her government has pressured private-sector banks to lower their interest rates and bolster disbursements to support a sluggish recovery in Latin America's top economy. "Credit is growing at a pace that we are not happy with," Mantega said at an event in Sao Paulo. He added that some banks are making a mistake in not reducing credit costs out of concern over loan delinquencies. Mantega said the so-called Selic rate would only continue to fall if inflation is totally under control. He added that the government's battle to weaken the local currency, the real, has had "reasonable" results. The real has weakened after a flurry of government measures and central bank interventions, sliding 3 percent so far this year.

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