Downgrade unjustified, says Brazil

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Brazil would respond “robustly” to global economic challenges, its central bank said yesterday after Standard & Poor’s (S&P) lowered the country’s credit rating to near junk status.

The finance ministry late on Monday described the S&P move as “inconsistent” and unjustified, and the bank followed with assurances that the South American giant would take the one-notch cut in stride.

“Brazil has responded and will continue responding in classic and robust fashion to the challenges facing us in the new international context,” the Central Bank of Brazil said.

The downgrade left Brazil’s sovereign debt rating just a notch above junk level.

The bank added that the response would combine macroeconomic austerity, exchange rate flexibility and use of liquid reserves to keep share price volatility in check.

“In this way, Brazil is in a good position to traverse… this new phase of normalisation of global financial conditions.” – Sapa-AFP See page 25

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