Retail will closely monitor the next Copom meeting to define interest rates

The fall in the Selic rate is seen by retail representatives as one of the conditions for the sector to grow again at the levels observed between 2001 and 2013, as shown by Brazil 61.

The level of interest, today at 13.75%, divides specialists. On the one hand, there are those who argue that it is necessary to wait for a clear rule from the government regarding the commitment to public accounts and the cooling of inflation before the Central Bank starts to lower the Selic rate. On the other hand, there are those who fear that monetary policy will harm economic growth and, therefore, defend that interest rates start to fall as soon as possible.

But it is not just the government or economists who are looking closely at the next Copom meeting. The productive sector, be it services, industry or agriculture, also closely follows interest rates. The National Confederation of Shopkeepers (CNDL), for example, published a study in which it assesses that an immediate reduction in interest rates is not on the market’s horizon, but that it is important to understand how the Committee will communicate its decision through minutes to understand what will be the next steps of monetary policy.

Merula Gomes, finance specialist at CNDL, analyzes the interest rate scenario. “Although the market and analysts really think that the interest rate is high, the forecast by Focus, and the market, is that there will be no drop, at least at this next meeting. In recent times, Bacen has maintained expectations of market, even as a matter of alignment. It’s a less insecure environment and people can deal better with what’s in place”.

Credit

The retail trade’s interest in interest rates is due to the fact that access to credit is more difficult and expensive in times of monetary tightening. According to the CNDL, the average interest rate on business overdraft reached 322% per annum in March. The corporate credit card revolving rate was 296%.

According to Merula Gomes, it is mainly small businesses that tend to feel higher interest rates the most. She explains that the reduction of interest must consider the stability of public accounts and that it cannot be “pen”. But she points out that the level of interest brings impacts on retail.
“With this difficulty, the entrepreneur ends up afraid of making new investments, mainly hiring, which is an expensive move. So, he avoids making new investments, because many times he will need to finance himself and, in that move, a rate of High interest rates also make projects more unfeasible, because when we are going to calculate the viability of a project, one of the basic rates that we use is the interest rate”.

Although obtaining credit may continue to be difficult to access and expensive, the offer should increase in 2023. According to Febraban, the banking sector projects a loan portfolio growth close to 8% this year.

Retail grew 1.4% per year, on average, between 2001 and 2022