Brazil’s state development bank is making the nation’s fight against inflation even more difficult.
BNDES — whose $170 billion-plus loan portfolio is bigger than the World Bank’s — has raised its key lending rate by two percentage points this year to 7 percent. The central bank’s benchmark Selic rate is at a nine-year high of 14.25 percent.
BNDES’s cheap cash is flowing into the economy at a time when the central bank is desperately trying to restrain the credit growth that’s stoked the surge in consumer prices. Subsidized lending is one of the reasons that inflation has soared to a 12-year high of 9.77 percent, even as Brazil suffers its worst recession in a quarter century.
Brazil Energy Insight 
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