UPDATE 1-Brazil's bank lending up 0.8% in September but continues to decelerate over 12 months
(Adds further data, context)
BRASILIA, Nov 7 (Reuters) - Outstanding loans in Brazil rose 0.8% in September from the month before to 5.576 trillion reais ($1.14 trillion), according to central bank data on Tuesday.
The 12-month growth rate of bank credit slowed down to 8%, down from 9% in August, marking a continued trend of deceleration amid elevated borrowing costs.
Last week, the central bank reduced interest rates by 50 basis points for the third consecutive time, bringing them to 12.25%. The bank kicked off an easing cycle in August, following nearly a year of maintaining rates unchanged at cycle-high levels in its battle against inflation.
In the minutes of its policy decision, the central bank said on Tuesday that the deceleration in credit extension aligns with the current monetary policy stance, with corporate credit granting experiencing a more pronounced slowdown.
"Household credit, in turn, shows lower deceleration and a recovery favoring low-cost modalities," it said.
A broad default ratio for both Brazilian consumers and businesses in non-earmarked credit remained stable at 4.9% for the month.
Lending spreads fell to 32.0 percentage points in September from 32.3 percentage in August. ($1 = 4.8814 reais) (Reporting by Marcela Ayres; Editing by Steven Grattan)
