Under criticism, Monetary Policy Committee maintains interest rate at 13.75%
“Once again the Central Bank turns its back on reality. It maintains the monetary policy contrary to everything that is being done by the government. It appears that decisions are taken more taking into account politics and are extremely damaging the country, especially the economic recovery and the resumption of jobs”.
According to economist Benito Salomão, the maintenance of interest rates for the sixth consecutive meeting – since August last year – was not a surprise for the financial market. “There were no surprises. This was already expected. What took some analysts by surprise was the tone of the statement, in which the Central Bank presented the reasons why interest rates might not start to fall as early as 2023”.
In its communiqué after the decision to keep the Selic rate at 13.75%, the Monetary Policy Committee (Copom) said that the return of part of the federal taxes on fuels and, mainly, the presentation of the fiscal framework reduced part of the uncertainty in around the fiscal policy conducted by the government. But the Copom highlighted that inflation is resistant and that other central banks continue to raise interest rates.
Asked whether he considered the Copom communiqué a signal to the government that interest rates may start to fall in the future, Rubens Pereira Júnior said that he had been expecting the Selic rate to fall two committee meetings ago and that “he is no longer satisfied with nods”.
Entities from the productive sector were also against the opinion of the Central Bank. In a note signed by President Robson Braga de Andrade, the National Confederation of Industry (CNI) stated that it considers the decision to keep interest rates at 13.75% “mistaken” and that the current scenario would already allow for a reduction in the Selic rate.
The CNI argues that the real interest rate of 7.7%, that is, the Selic minus inflation, is at “a level above what is necessary to guarantee the maintenance of the deceleration path of inflation in the coming months” and that it has contributed to the increase in credit for companies and the slowdown of the economy.
Benito Salomão also claims that, although the Central Bank has hinted that the interest rate reduction cycle may take longer to start, this does not necessarily mean that the Bacen rules out lowering the Selic later this year.
“In June, the Copom meets again. New information and new data will be incorporated into the analysis. And, perhaps, with the fiscal framework already approved and inflation a little lower, perhaps the Central Bank can signal a drop in next announcement”, he evaluates.
Understand
Since the beginning of the year, the government has raised the tone of criticism against the level of the economy’s basic interest rate. President Lula even went so far as to say that he could try to review the autonomy of the Central Bank after the end of the mandate of the current president, Roberto Campos Neto.
In the assessment of the government and representatives of the productive sector, high interest rates are hindering access to credit and slowing down the economy. The Central Bank, on the other hand, argues that it is fulfilling its role of making inflation converge towards the target, which is the responsibility of the monetary authority, and that the situation requires patience.
By Brasil 61
