Africa

Higher income and fintech expansion boosted credit growth, even as monetary policy remained effective. Credit: IMF

By Swarnali A. Hannan, Daniel Leigh, and Rui Xu
WASHINGTON DC, Oct 21 2025 (IPS)

At 15 percent, Brazil’s monetary policy interest rate (called Selic) is one of the highest among major economies. Yet in 2024, bank credit grew by 11.5 percent and corporate bond issuance rose by 30 percent.

This credit expansion—in the face of high policy rates—benefited many individuals, households, and companies. But it also raised questions about the effectiveness of monetary policy itself. In other words, why did the central bank’s efforts to cool down the economy, by making financing more expensive, seem not to be working?

Our analysis, in the context of Brazil’s latest yearly economic review (the Article IV consultation), shows that concerns have been largely unwarranted and that monetary policy transmission in Brazil remains effective. Indeed, recent data indicates that credit growth is starting to slow down.

So, what exactly has been happening?

Even as monetary policy was doing its job as intended, we saw two other factors playing a critical role: strong income growth and the country’s success in expanding financial inclusion. These factors boosted the demand for credit and its supply.

A committed central bank

Brazil’s was the first major central bank to hike rates during the pandemic. After a period of easing, it started a new tightening cycle in September 2024. These decisions have been appropriate and guided by the need to bring inflation and inflation expectations down to its 3 percent target.

The country’s twelve-month inflation rate reached 5.1 percent in August, down slightly from the previous month, but still well above target this year. Inflation expectations are also projected to stay above target over an eighteen-month horizon. This explains the rise in policy rates since the pandemic, in line with standard inflation-targeting principles.

How effective is monetary policy transmission?

To gauge the effectiveness of Brazil’s monetary policy tightening, our report estimates how changes in the central bank’s policy interest rate pass through to bank lending rates paid by households and businesses.

We find that a 1 percentage point increase in the policy rate raises lending rates by around 0.7 percentage point after four months. To raise average lending rates in the economy by one percentage point, the monetary policy rate must increase by about 1.4 percentage points, since roughly 40 percent of total credit is comprised of government-directed loans that are less responsive to policy rate changes.

The analysis also suggests that since 2020, corporate lending rates have become more responsive to changes in the basic rate. This may in part result from the 2018 reform of Brazil’s large development bank, BNDES, which aligned its lending rates with long-term market rates.

Bank-level analysis shows corporate loans adjust faster than consumer loans, likely due to tighter margins and more experienced borrowers. In turn, payroll-backed consumer loans are the least responsive because of rate caps.

What drove credit growth

Although Brazil’s monetary policy is working, credit growth has been strong over the past few years. This was due to both cyclical factors and structural changes. On the cyclical side, Brazil’s economy has grown faster than expected, with low unemployment and rising incomes driving higher credit demand.

Moreover, Brazil has been making significant structural changes that have increased financial inclusion and credit availability.

The rapid expansion of fintech lenders gave more people access to credit. In 2024, digital banks and other fintech lenders accounted for a quarter of the credit card market and over 10 percent of non-payroll personal loans.

Increased competition reduced banking-sector concentration and lowered average lending rates of incumbent banks. In addition, bond-market financing for corporates as a share of GDP tripled in the last decade, driven by tax-exempt debentures. All these factors supported credit growth.

With a 15 percent basic rate, Brazil’s central bank has administered a strong dose of monetary tightening to temper credit growth and return inflation and expectations to target. New loan volumes have been falling since April, further suggesting that the treatment is working.

More broadly, Brazil’s economy is showing signs of moderation amid tight monetary and fiscal policies and elevated global policy uncertainty. Overall, our research shows that concerns about the lack of effectiveness of monetary are proving to be largely unwarranted and that monetary policy transmission in Brazil remains active.

Daniel Leigh is IMF mission chief for Brazil; Swarnali A. Hannan is a deputy division chief in the IMF’s Western Hemisphere Department; and Rui Xu is an economist in the Monetary and Capital Markets Department

IPS UN Bureau

 

Follow @IPSNewsUNBureau
!function(d,s,id){var js,fjs=d.getElementsByTagName(s)[0],p=/^http:/.test(d.location)?'http':'https';if(!d.getElementById(id)){js=d.createElement(s);js.id=id;js.src=p+'://platform.twitter.com/widgets.js';fjs.parentNode.insertBefore(js,fjs);}}(document, 'script', 'twitter-wjs');  

The EU Deforestation Regulation has suffered multiple setbacks due to its complex and occasionally vague legal architecture, leading to regulatory uncertainty and inconsistent interpretations across Member States. For the EUDR to go ahead successfully, some critical issues require immediate attention.

“He should bring a sleep mask and earplugs. The shouting can go on until four in the morning", a former inmate warned

Roman B. (43) trank täglich bis zu zwölf Bier, oft fing er schon früh morgens an. Ein Video veränderte alles. Drei Monate nach seiner Therapie spricht er offen über Scham, seinen Weg aus der Sucht und neue Hoffnung.

Das schockierende Vermächtnis von Virginia Giuffre (†41): Was sie zu Lebzeiten nicht mehr sagen konnte, erscheint jetzt als Biografie des Epstein-Opfers. Blick hat das Buch «Nobody's Girl» gelesen.

Gvernment officials have warned that Issa Tchiroma Bakary's declaration is illegal.

Mwavita Rohomoya sits with her four children in front of her drink stall in Minova, Kalehe territory, South Kivu province, DR Congo, on 23 April 2025. Minova is one of the first areas in South Kivu to be affected by the resurgence of violence, one of the immediate consequences was the rise in prices of staple foods and essential goods. UNICEF’s cash transfer programme helped families meet their urgent needs—buying food, finding shelter, and accessing healthcare—while also enabling some, like Mwavita, to invest in small-scale income-generating activities. Credit: UNICEF/Christian Mirindi Johnson

By Oritro Karim
UNITED NATIONS, Oct 20 2025 (IPS)

In 2025, unprecedented cuts to foreign aid and humanitarian funding have exacerbated global hunger crises, leaving millions without access to food or basic services. Funding shortfalls have forced aid agencies to scale back or suspend lifesaving programs in some of the world’s most food-insecure regions, particularly across the Global South—exacerbating already dire conditions caused by conflict, displacement, economic instability, and climate shocks.

On October 15, the World Food Programme (WFP) released a report, A Lifeline At Risk: Food Assistance At A Breaking Point, which illustrated the impact of funding shortfalls to their programs in the context of six countries: Afghanistan, the Democratic Republic of the Congo (DRC), Haiti, Somalia, South Sudan,and Sudan. In these nations, funding cuts have had devastating consequences, with entire communities being pushed to the brink of starvation.

“We see significant reductions in our operations and the operations of our partners,” said Ross Smith, WFP’s Director of Emergency Preparedness and Response. “That goes from cutting people completely off of assistance, reducing rations, and reducing the duration of assistance. Many vulnerable people are completely without a safety net or a landing pad at this point in time.”

The report highlighted that the number of people in urgent need of food and livelihood assistance has surged to a record high of 295 million in 2025—coinciding with major reductions in foreign aid and humanitarian funding from key donors, including the United States. As a result, WFP has been forced to drastically scale back its operations, grappling with an estimated 40 percent cut in funding that has severely limited its ability to deliver lifesaving support to the world’s hungriest populations.

WFP warns that recent funding cuts could “severely undermine global food security”. It is estimated that roughly 13.7 million people who are dependent on food assistance from WFP could be pushed into emergency levels of hunger, with children, women, refugees, and internally displaced people being disproportionately affected.

“These cuts are triggering additional food insecurity that in itself could have impacts at both national and regional levels,” said Jean-Martin Bauer, Director of WFP’s Food Security and Nutrition Analysis Service.

WFP notes that the full extent of the impact of these funding cuts to food assistance will not be immediate, but will unfold in the coming months. “This is why we call it a ‘slow burn’ in the report,” said Bauer. “Because the cuts haven’t fully fed through the system yet to all countries and communities.”

Bauer warned that escalating hunger amid dwindling aid could have far-reaching implications that could exacerbate existing crises, citing rising rates of child marriage, increased school dropouts, heightened social instability, increased displacement, and growing economic and political turmoil. Furthermore, WFP has recorded increased rates of malnutrition among children in refugee communities, with many of these children experiencing lifelong health challenges as a result.

One of WFP’s most pressing challenges has been the reduction of disaster preparedness programs for some of the world’s most crisis-prone countries, as resources are redirected to sustain emergency food assistance for the most affected populations. In Haiti, WFP has been forced to suspend its hot meals program for displaced families and cut monthly rations in half, as the nation continues to struggle with record levels of hunger.

Bauer noted that Haiti’s contingency stock of humanitarian aid has been fully depleted and, for the first time since Hurricane Matthew in 2016, WFP has been unable to replenish it. The agency continues to closely monitor Haiti’s food security situation.

Similarly, Smith reported that conditions in Afghanistan have worsened considerably over the course of the year, with fewer than 10 percent of the country’s 10 million food-insecure people now receiving humanitarian aid. “We expect pipeline breaks as early as November and can currently only provide (limited) winter assistance,” said Smith, noting that less than 8 percent of those in need of winterization support will receive it.

In the Democratic Republic of the Congo (DRC), WFP has been forced to cut its operations from targeting 2.3 million people to just 600,000 and warns that its resources could be entirely depleted by February of next year without additional funding. In Somalia, WFP’s reach has also been drastically reduced, with the agency now able to assist less than 25 percent of the people it supported last year.

In Sudan, WFP has managed to assist roughly 4 million people in August—half of them in hard-to-reach areas such as Darfur and South Kordofan. “We are shifting away from what used to be a very large program, in the absence of significant government support for many people, to one now that is famine prevention that is moving from hotspot to hotspot,” said Smith. In neighboring South Sudan, WFP has redirected its limited resources to prioritize civilians experiencing the most extreme levels of hunger.

According to the report, WFP has recalibrated its food assistance priorities in the face of dwindling aid budgets and shrinking staff, choosing to focus on famine prevention efforts and distributing food rations that reach fewer people but cover basic needs. Bauer added that it is imperative for humanitarian aid groups to align with local actors and continue to closely monitor levels of hunger. “The data and analytics – they’re the humanitarian community’s GPS,” Bauer said. “We’re taking the risk of losing our way without the data. So the data must flow.”

IPS UN Bureau Report

 

Follow @IPSNewsUNBureau
!function(d,s,id){var js,fjs=d.getElementsByTagName(s)[0],p=/^http:/.test(d.location)?'http':'https';if(!d.getElementById(id)){js=d.createElement(s);js.id=id;js.src=p+'://platform.twitter.com/widgets.js';fjs.parentNode.insertBefore(js,fjs);}}(document, 'script', 'twitter-wjs');  

Morocco want to be a "strong contender" at all levels of global football after beating Argentina to win the Under-20 World Cup for the first time.

Morocco want to be a "strong contender" at all levels of global football after beating Argentina to win the Under-20 World Cup for the first time.

Main agenda items, approximate timing, public sessions and press opportunities.

The protesters are seeking the release of Nnamdi Kanu who has been in detention since 2021 on terrorism charges.

Összesen 491 helyszínre vonultak ki a tűzoltók a múlt héten. A leggyakrabban (178) műszaki segítségnyújtás miatt fordultak hozzájuk, a legtöbbször Kassa megyében (34 alkalommal) – közölte a Facebookon a Tűzoltóság és Műszaki Mentőszolgálat.

The press briefing will take place on Tuesday, 21 October 2025 at 14.00

Joint Press Release — 4th EU–Iraq Cooperation Council.

Volodymyr Zelensky visited Donald Trump at the White House on Friday – and did not receive confirmation of the delivery of Tomahawk cruise missiles previously signalled by the US. The US President had agreed to a US-Russia summit in Budapest in a phone conversation with Putin on Thursday. Media discuss what Trump's latest U-turn means.

Le gouvernement français a confirmé la suppression des Aides Personnalisées au Logement (APL) pour les étudiants étrangers « hors Union européenne et non boursiers » dans le […]

L’article France : fin des APL pour les étudiants étrangers hors UE dès 2026 est apparu en premier sur .

Hiába fokozódik az orosz fenyegetés Európa ellen, a koppenhágai csúcson sem sikerült közös nevezőre jutni a védelmi fejlesztések kérdésében. Eközben Strasbourgban a szélsőbal- és jobboldal zajos, de üres bizalmatlansági színjátékot rendezett az Ursula von der Leyen vezette Bizottság ellen.

Euronews: Hiba lépett fel az Amazon Web Services (AWS) működésében, ami miatt számos weboldal, applikáció és játék működése akadozik vagy állt le. A Downdetector szerint többek közt a Snapchat, az Amazon Prime Video, az HBO Max, a McDonald’s appja, a Playstation Network, a Disney+, az IMDb, a Reddit, a Snapchat és a Tinder is áll, de a lista ehhez képest még nagyon hosszan folytatható. Az AWS közlése szerint fejlesztőik aktívan dolgoznak a hiba elhárításán és az okok feltárásán.

European Parliament’s spokespersons will hold a last-minute briefing on the 20 - 23 October plenary session today at 16.30.

Source : © European Union, 2025 - EP