Brazil’s central bank has room to cut interest rates further because inflation is below the government’s target.

“The central bank has cut rates a lot, we are at a very reasonable level,” Mantega said late yesterday in Sao Paulo. “In the next years, in the medium term, and I don’t want to interfere in the monetary policy, there’s room to cut more.”

The central bank said the smallest interest-rate cut in 5 meetings last month on signs that Latin America’s largest economy is pulling out of a recession. After slashing the benchmark rate to a record low of 8.75 %, policy makers said in the minutes of the July 21-22 meeting that the reduction would spur economic growth without sparking inflation.

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