May 9, 2020 / 9:04 PM / 24 days ago

Brazil's central bank to shower economy with money in case of depression: economy minister

SAO PAULO (Reuters) - Brazil’s Economy Minister Paulo Guedes on Saturday said the country’s central bank is likely to shower the economy with money in case of a depression due to the coronavirus pandemic.

FILE PHOTO: Brazil's Economy Minister Paulo Guedes wears a protective mask during a news conference after a meeting with President of Brazil's Supreme Federal Court Dias Toffoli, amid the coronavirus disease (COVID-19) outbreak, at the Supreme Federal Court in Brasilia, Brazil May 7, 2020. REUTERS/Adriano Machado/File Photo

Still, Guedes said in a live online event hosted by Itau Unibanco Holding SA (ITUB4.SA) that he sees Latin America’s biggest economy posting a “V-shaped” recovery, as its vital signs are preserved so far.

Brazil’s Congress on Thursday approved a constitutional amendment with extra spending and emergency measures to help weather the impact of the crisis, giving the central bank powers to buy private and public sector assets.

In case of a depression, Guedes said the central bank could provide liquidity to companies and even small businesses.

“We are going to shower all the economy in case of a depression, if there is infinite demand for liquidity,” he said.

So far, Guedes said, the Brazilian economy is more likely to post a rapid recovery, boosted by record-low interest rates. On Wednesday, Brazil’s central bank cut its benchmark Selic rate by 75 basis points to 3.00%.

He added that measures allowing companies to reduce workers’ salaries and hours have saved nearly 6 million jobs so far.

The remarks come as Brazil is fast emerging as one of the world’s coronavirus hot spots, reaching 155,939 cases and 10,611 deaths as of Saturday.

Brazil’s Congress has declared a three-day national mourning period.

Earlier this week, far-right President Jair Bolsonaro said he was planning to have 30 friends to the presidential palace for a barbecue and was considering extending the invitation to thousands more.

Bolsonaro subsequently gave up his plans for the gathering and said it was fake news.

Reporting by Carolina Mandl; Editing by Dan Grebler and Chris Reese

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