Brazil\'s state development bank is lending to companies at the lowest rate relative to the country\'s benchmark in two years, undercutting President Dilma Rousseff\'s efforts to curb inflation. The National Monetary Council last week kept the long-term reference rate for loans from the development bank, known as BNDES, at 6 per cent for a seventh quarter, while the central bank has raised the benchmark interest rate four times this year to 12.25 per cent to stem inflation. The gap between the two has swelled to 625 basis points, the widest spread since February 2009, when it was at 650 points. Companies, including JBS and Suzano Papel & Celulose are able to get cheaper funding from BNDES even as policy makers increase interest rates, raise taxes on consumer credit and cut spending to slow inflation from a six-year high of 6.55 per cent. Central bank President Alexandre Tombini has raised the Selic (overnight lending) rate by 150 basis points this year and is calling on the government to cut loan subsidies. \"The difference between the Selic rate and the BNDES is one of the greatest distortions in the country,\" Alexandre Schwartsman, a private consultant and a former central bank board member, said in a phone interview from Sao Paulo. \"They want to reduce inflation but they don\'t want growth slowing down.\" Traders are wagering the central bank will raise borrowing costs by 25 basis points, or 0.25 percentage point, to 12.50 per cent at its July policy meeting, and are split on whether it will then increase rates for a sixth straight meeting in August, interest-rate futures contracts show. Economists forecast the bank will fail to bring price increases down to the 4.5 per cent midpoint of its target range next year. BNDES lines of credit to Brazilian companies announced this year include 2.7 billion reais (Dh6 billion) for Eldorado Celulose e Papel, controlled by J&F Participacoes, the holding company of Sao Paulo-based JBS, the world\'s largest beef producer. The bank also approved a 331.4 million reais line of credit for Niteroi-based Ampla Energia Servicos and 1.2 billion reais for Suzano. From / Gulf News