Finance Minister says he will only comment on details of the decision after reading the Copom minutes, which will be published on Tuesday (24.Sep)
The Minister of Finance, Fernando Haddadsaid this Wednesday (18.Sep.2024) that the decision of the Central Bank raising the Selic rate to 10.75% per year was not surprising. There was an increase of 0.25 percentage points in the basic interest rate. It is the first time that the monetary authority has raised the base rate since August 2022 –2 years and 1 month ago. The decision of the directors of the body was unanimous.
“I was not surprised, but I will only comment on the decision after reading the minutes next week, as usual. I will take a look, I will talk internally, I will check what to expect in the near future.”he declared in an interview with journalists, leaving the Ministry of Finance, in Brasília.
The minutes of the Copom (Monetary Policy Committee) will be published on Tuesday (September 24). In July, the document said that the body would have no problem raising the rate if it considered it necessary.
The result released this Wednesday (18th September) followed the expectations of financial market agents. It is also the first time that the increase has occurred under the new president’s administration. Luiz Inacio Lula da Silva (PT).
The Central Bank said in its statement announcing the hike that a new cycle of increases is expected to begin. However, it did not specify the magnitude of the upcoming increases.
“The pace of future adjustments in the interest rate and the total magnitude of the cycle now underway will be dictated by the firm commitment to convergence of inflation to the target and will depend on the evolution of inflation dynamics”states the body’s text. Here is the full (PDF – 45 kB).
The authority’s role is to place inflation at the center of the target of 3.0%. The annualized index was at 4.24% in August (still within the tolerance range).
Interest rates in the USA
According to Haddad, the court of 0.5 percentage points in the US benchmark interest rate was expected earlier, in June. He said the pace of decline should be “lasting”.
“I think we should enter a path of cuts and that this will be long-lasting. I don’t believe that in 2025, 2026 we will have a surprise. This is great for Brazil and for the world because it provides great domestic relief and places on us the responsibility of continuing to do the work of putting our house in order here to reap the fruits of these favorable winds.”he said.
THE Fed (Federal Reservethe US central bank) decided this Wednesday (September 18) to reduce the range of the basic interest rate from 5.25% to 5.50% to 4.75% to 5% per year. It represents the first reduction since March 2020, when the covid-19 pandemic began. Here is the full of the statement (PDF – 148 kB).
The last cut in US interest rates was made at an extraordinary meeting 4 years and 6 monthswhen countries’ central banks had doubts about the effect of social isolation on the global economy.
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