Brazilian loan defaults hit highest since 2017

BRASILIA, Feb 25 (Reuters) - Brazil's default rates for consumers and businesses on non-earmarked loans rose to ?5.5% in January, the highest level ?since August 2017, central bank data showed on Wednesday.

Over 12 ?months, the indicator increased by 1.1 percentage points, ?according to official data, amid ?persistently high borrowing ?costs in Latin America's largest economy.

After halting an aggressive ?monetary tightening cycle in July, ?the central bank has kept its benchmark interest rate unchanged at 15%, ?the highest level ?in nearly ?two decades.

Policymakers have signaled they expect to begin cutting rates next month, as clearer ?signs emerge of a cooling economy that ?had been slow to lose momentum, partly supported by government stimulus.

In its latest monetary policy report in December, the central bank attributed ?the ?rise in defaults over the past ?year mainly to changes in accounting rules, ?adding that it was already seeing "some signs of stabilization."

Central bank data also showed total outstanding loans in Brazil fell 0.2% in January from the previous month to 7.1 trillion reais ($1.38 trillion).

Annual credit growth ?slowed to 10.1% from 10.3% in December, while the central bank projects an 8.6% expansion ?this year.

($1 = 5.1522 reais) (Reporting ?by Marcela Ayres; Editing ?by Jan Harvey)