The bank says the measure will free up some $13bn, which banks could lend to businesses and individuals. 

 

The Brazilian economy is expected to expand by 1% this year - the fourth consecutive¹ year of sluggish² growth. 

 

The central bank announcement comes less than three months before presidential elections.

 

President Dilma Rousseff will seek a second four-year term in October.

 

In 2010, when she was elected, Brazilian gross domestic product (GDP) grew by 7.5%. 

 

Growth dropped to 2.7% in 2011, 1% in 2012 and 2.5% last year.

 

The government is forecasting 1.8% growth this year, but independent economists³ expect the GDP to grow by only 1%. 

 

"The central bank decided⁴ to adopt measures to improve the distribution of liquidity⁵ in the economy," the bank announced.

 

The decline in Brazil's fortunes, cutbacks in public services, continuing corruption⁶ and what is seen as excessive spending on the World Cup and the 2016 Olympics have brought protesters out on to the streets over the past year.

 

The economy had become over-dependent on exports to China under former President Luis Inacio Lula da Silva, analysts⁷ say. 

 

Exports to China grew at roughly four times the rate of total exports between 2000 and 2010. 

 

As Chinese demand fell away, Brazilian growth stuttered, weighed down by poor infrastructure⁸, high consumer debt and sagging⁹ business confidence.

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