Banks respond quickly to rate cut

Some of Brazil's major banks have responded quickly to the central bank's interest rate cut Wednesday to 16.5% from 17.5%, local new service InvestNews reported. Brazil's three largest banks - Banco do Brasil, Caixa Economica Federal and Bradesco (NYSE: BBD) - all announced they were cutting their lending rates as a result of the central bank's action. International heavyweights such as UK-based HSBC (NYSE: HBC) joined the local players and said its Brazilian unit was also lowering the cost of borrowing. The banks reduced their rates both for individuals and companies. The central bank is expected to continue its rate cuts next year as the economy keeps improving and the banks are set to follow suit, Standard & Poor's financial services ratings analyst Daniel Araujo told BNamericas from Sao Paulo. However, the cost of lending in Brazil is still very high by international standards, he added.