Brazil's President Luiz Inacio Lula da Silva said on Monday that the changes in the savings accounts regulations, announced by the federal government last week, will help reduce the country's interest rate.

In his weekly radio show "Breakfast with the President", Lula said that lower interest rates will lead the resources of economy to be used in the productive sector.

"The interest rate will keep on falling, and the decreasing interest rate is important for the population, because the money will go to the production, in ways to purchase houses, cars and other products, which will generate jobs. That is what we want for Brazil," the President said.

The federal government announced last week it will charge income tax from all savings accounts with a balance of over 50,000 reais (US$24,030).

The savings accounts' interest rate in Brazil recently became comparable to that of the investment funds, which are taxed. According to the government, this could make big investors turn to the savings accounts, which were free of taxes.

The basic interest rate in Brazil recently underwent a one percentage point cut and is currently at 10.25 percent, the lowest since the Central Bank started the measurements in 1996.

It was the third consecutive cut in the Selic rate this year. The country cut the rate from 13.75 to 12.75 percent in January, and from 12.75 to 11.25 in March.

(Xinhua News Agency May 19, 2009)