Copom waves with the possibility of a drop in interest rates starting in August

The minutes of the Monetary Policy Committee (Copom), released this Tuesday (27) by the Central Bank, informs that the “predominant assessment” expressed during the last meeting was an expectation of greater confidence for a drop in interest rates from from August. The Copom meeting took place on the 20th and 21st.

The Copom maintained the basic interest rate (Selic) at 13.75% per year, on the grounds that “it is compatible with the strategy of convergence of inflation towards the target over the relevant horizon”.

The rate has been at this level since August 2022, and is the highest since January 2017.

According to the document released this Tuesday, “the predominant assessment was that the continuation of the ongoing disinflationary process, with the consequent impact on expectations, may allow the accumulation of the necessary confidence to start a parsimonious process of inflection at the next meeting” .

The minutes also inform that the members of the committee were unanimous in considering that the future steps of the monetary policy will depend on factors related to the evolution, expectations and projections of inflation.

In the assessment expressed by the committee, the current situation is characterized by a stage of the disinflationary process that tends to be slower and by expectations of unanchored inflation, which, according to the committee, makes it necessary to maintain “caution and parsimony” in order to meet the targets , having, in maintaining the Selic rate, an “appropriate tool to ensure the convergence of inflation”.