The Brazilian credit market posted a modest expansion for the first half of 2018 on declining interest rates and falling arrears levels, the Central Bank said Friday. Total credit as of June 30 was R$3.1 trillion, up 1.7% from June 30, 2017. The modest increase in credit was led by private sector banks and was fueled by consumer loans, especially for motor vehicles. The average interest charge for all loans as of the end of June was 21.1%, down from 22.2% at the end of June a year ago. Arrears rates continued to drop, falling to just 3.1% at the end of June, down from 3.7% at the end of June of 2017. Credit expansion has been fueled by cuts to the Central Bank’s base interest rate, which now stands at an historic low of 6.5%. But further expansion of credit has been checked by continued job worries and political uncertainties.
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