Copom maintains basic interest rate at 13.75% per annum
The Copom’s decision on the level of interest rates has been surrounded by expectations since the last committee meeting, which took place in early February. Disgusted with Bacen’s more restrictive monetary policy, President Lula and members of the government began to demand the Central Bank to reduce interest rates.
With the decision, the interest rate remains the same for the fifth consecutive meeting. According to the financial market, the projection is that the Central Bank will begin to reduce the Selic from the 2nd quarter, which would close the year at 12.75%. For next year, interest rates are expected to drop to 10%.
Bacen’s movement in relation to interest rates is of interest not only to the government, but to the productive sector. According to Merula Gomes, a financial expert at the National Confederation of Shopkeepers (CNDL), it would be better if the Selic were lower, which does not mean that the Copom’s decision was wrong.
“The productive sector improves when interest rates are lower, so we look forward to this drop in interest rates, which really shouldn’t happen now. We understand that lower interest rates favor the productive sector, but this is an issue that must be analyzed technically and not politically. Because any other pressure that is not, the calculations, and the issues that are happening can even have a negative effect on the interest rate”, he points out.
To define the level of interest, the Central Bank uses the inflation target system. One of Bacen’s objectives is to ensure that the target is achieved. With high interest rates, credit becomes more expensive and consumption drops, which makes it difficult for the economy to grow.
After falls in the last months of 2022, inflation expectations have risen. Although it showed a negative variation in the last Focus Bulletin, the inflation estimate for 2023 is at 5.95%. For 2023, the inflation target was set at 3.25%, and will be considered met if it fluctuates between 1.75% and 4.75%.
For financial analyst Merula Gomes, one of the ways to facilitate the reduction of interest rates is the presentation of the fiscal framework. “This path to reducing interest rates goes through reforms, tax reform, administrative reforms, tax reforms and having a fiscal framework that the market can trust. So we will experience a more acceptable drop in interest rates, with greater security. We have rising interest rates in the United States, the Central Bank there is making upward adjustments to the interest rate, and that puts pressure on Brazil as well,” she explains.
Scenery in USA
Earlier this Wednesday, the Federal Reserve (Fed), the American Central Bank, decided to increase interest rates in the country by 0.25 percentage points. The decision comes amid the bankruptcy of the Silicon Valley Bank (SVB), which began a period of instability in the American banking sector.
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By Brasil 61
