RIO DE JANEIRO (Reuters) - Brazilian President Luiz Inacio Lula da Silva said on Monday there was "no explanation" for the country's high interest rates, with the benchmark rate at a six-year high, adding that development bank BNDES could help bring down lending costs.
Lula, who last week criticised the central bank's formal autonomy and suggested a review of its status, said Brazil's problem was a "culture of high rates" rather than the newfound independence of the central bank.
Local markets, which were already down in the day, extended losses after his remarks, with the Brazilian real weakening 1% against the U.S. dollar in spot trading and benchmark stock index Bovespa also sliding as much as 1%.
Lula called on business leaders to speak out against current interest rate levels, while dubbing the monetary policy committee's explanation for keeping rates at the current 13.75%, in place since August, "shameful".
"There is no justification for the interest rate levels. We just need to look at Copom's letter to know how shameful this rate hiking is," Lula said at the inauguration of new BNDES head Aloizio Mercadante.
The committee, known as Copom, said last week it was considering holding interest rates high for longer than markets expect due to fiscal risks under Lula.