Brazil's bank lending accelerates in February despite high interest rates

BRASILIA, April 9 (Reuters) - Outstanding loans in Brazil rose in February despite an ongoing aggressive monetary tightening cycle, central bank data showed on Wednesday.

Total bank lending increased 0.4% from the previous month to 6.487 trillion reais ($1.08 trillion), with 12-month growth quickening to 11.8% from 11.7% in January.

The expansion came despite a series of interest rate hikes aimed at reining in inflation. Since September, policymakers have lifted rates by 375 basis points to 14.25%, and another increase is expected at the May meeting.

Looking ahead, the central bank expects a significant slowdown in credit growth. At the end of March, it projected credit to expand 7.7% this year, down from a 9.6% estimate in December. That would mark an even sharper deceleration from the 11.5% growth recorded in 2024.

Still, many expect new rules announced in Mid-March for payroll-deductible loans to private-sector workers to give the credit market a fresh boost.

Since the program's launch, nearly 4.5 billion reais in new loans have been issued, according to figures cited by the head of state-owned lender Caixa Economica Federal on Tuesday.

Central bank director of monetary policy, Nilton David, said earlier in April that policymakers have yet to reach a firm conclusion on the impact of the changes. He noted that one possibility is borrowers refinancing expensive debt with cheaper credit, while another is taking on new debt.

($1 = 6.0108 reais)