BRASILIA, June 6 (Xinhua) -- Brazil's finance minister said Wednesday that a lower inflation rate in May will help cut the country's annual basic interest rate, currently at its lowest level of 8.5 percent.
Guido Mantega made the remarks following a report released earlier by Brazil's national statistics institute IBGE, which said the inflation rate in Brazil fell from 0.64 percent in April to 0.36 percent in May, marking the smallest hikes in prices in 20 months.
Mantega said according to the report, the annual inflation rate was currently under 5 percent, representing a fall compared with last year.
"That gives us a degree of freedom to have a more flexible monetary policy, in other words, to cut interest rates and increase credit," Mantega added.
Mantega said officials believed an increase in credit and a decrease in inflation rates will continue in June.
"That has already spurred purchases and investment, so we already have positive results, even for May," he said.
Mantega added he was confident that Brazil would see a much greater economic growth in May and June than in April and the first quarter of 2012, when it grew by barely 0.3 percent.
Meanwhile, he said vehicle sales increased by 10.8 percent in May, before tax exemptions aimed at boosting the industry's sales came into effect.
He stressed Brazil's economy was on the right track with growing gross domestic product (GDP) and industrial output.
"The sector that grew the least was the automotive sector, which weighs largely in the GDP, and now it will grow more than other sectors, so we will be rebuilding a larger growth," Mantega said.