09/20/2023 – 19:44
The Monetary Policy Committee (Copom) of the Central Bank of Brazil (BCB) reduced, this Wednesday (20), its basic interest rate, the Selic, by half a percentage point, to 12.75%, in line with the monetary easing demanded by the government and expected by the market.
The Copom considered that there was an “evolution of the disinflation process”, by applying the second consecutive cut of half a percentage point in the Selic in less than two months, according to a statement from the entity at the end of a two-day meeting.
The body ended the freezing of the Selic rate in August, which had been maintained at 13.75% for a year, also reducing it by 0.5 percentage points and starting a gradual cycle of monetary easing.
The BCB plans to continue with reductions “of the same magnitude” in the next meetings in November and December, when considering this pace appropriate, the body said in the statement.
The decision to continue the cuts is welcomed by the government of President Luiz Inácio Lula da Silva, who since beginning his third term in January has repeatedly advocated lower interest rates to make credit more accessible and stimulate consumption and investment. .
With a high Selic, interest charged on loans, financing and credit cards increases, which discourages consumption and investment. This relieves pressure on the prices of goods and services, but it also slows down the economy, which goes against the government’s objectives.
The economy lost strength in the second quarter, with growth of 0.9% compared to the first quarter, but continued to grow for the eighth consecutive quarter, according to data from the Brazilian Institute of Geography and Statistics (IBGE).
Twelve-month inflation decreased in June, but increased in July and August, reaching 4.61% in twelve months.
“We are reaping the fruits of the monetary policy that brought down inflation,” said Finance Minister Fernando Haddad on Sunday, although he acknowledged that the rise in prices should end the year “at around 5%”, above the government target. BCB of 3.25% (around 1.5 percentage points).
#Copom #cuts #Selic #percentage #point