Selic may rise again soon, says Central Bank

A new high in the Selic rate could happen soon, according to Copom. At the last meeting held, the rate was maintained at 13.75%. know more

Estimated reading time: 3 minutes

The Central Bank’s Monetary Policy Committee, the famous Copom, has already stated that the Selic rate may rise again in Brazil. According to the committee, if inflation continues to rise, the Central Bank will not hesitate to resume the cycle of rising interest rates, which has been on the rise for a few months now.

The increase in the Selic is an attempt to control inflation, slowing down the pace of economy. So, in practice, this makes access to the credit more expensive, and makes it difficult to buy products in installments. So, to find out more, check it out below.

Selic rate may rise again, says Central Bank

Thus, in a meeting held last week, the Copom already stated that it would maintain the Selic rate at 13.75% per year. Today, the rate is at its highest level since 2017. This was the first pause in the Selic rate hike after 12 consecutive hikes. However, it is possible that the high cycle will repeat itself, if necessary.

“Due to long and variable monetary policy lags, much of the expected contractionary effect, as well as its impact on current inflation, has not yet been observed. These impacts should become clearer in the activity indicators during the second half of the year”, read the text in the minutes of the last Copom meeting, on September 27th.

Selic rate is the index that controls inflation

As we explained, the Selic rate is today the main instrument for controlling inflation. It is used in the negotiation of public bonds issued by the National Treasury. In addition, it serves as a reference for all other rates in the economy. When the Copom increases the Selic rate, the idea is precisely to contain demand, causing higher interest rates and stimulating savings and investments.

In relation to the current Selic, the institution stated that inflation remains high. Even with the drop in the price of fuel and electricity, for example. Thus, the strategy is to maintain vigilance and, if necessary, make further adjustments. In August this year, inflation had a small decrease of 0.36%, but the IPCA accumulated 8.73% in the last 12 months.

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In a note, the Central Bank also stated that the basic scenario for inflation involves different risks. Among them is increased pressure from abroad, as well as a slowdown in the economy. Finally, there is uncertainty about the future of the fiscal issue in the country, which may also interfere in the next meetings.

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