BC keeps Selic at 13.75% and highlights higher cost to bring inflation to targets

BC keeps Selic at 13.75% and highlights higher cost to bring inflation to targets

By Bernardo Caram

BRASILIA (Reuters) – At the first meeting of the Monetary Policy Committee (Copom) after President Luiz Inácio Lula da Silva took office, the Central Bank decided this Wednesday to keep the Selic rate at 13.75% per annum and stressed that uncertainty and the deterioration in expectations increase the cost for the monetary authority to reach its targets.

“The conjuncture, particularly uncertain in the fiscal scope and with inflation expectations moving away from the target in longer horizons, demands greater attention in the conduction of the monetary policy”, informed the communiqué of the Copom meeting.

“Such a situation raises the cost of the necessary disinflation to reach the goals established by the National Monetary Council”, he added.

Maintaining the basic interest rate for the fourth consecutive meeting was unanimously decided by the BC’s board and is in line with market expectations, according to a Reuters poll, according to which all 30 economists consulted expected the Selic to remain at the same level. .

With the decision, the BC kept the Selic at a level 11.75 points above the historic low of 2% per year, reached in the midst of the Covid-19 pandemic and which was in effect until March 2021. high since January 2017, when it was also at 13.75% per annum.

The first Copom meeting after a change of government with a formally autonomous Central Bank took place after Lula criticized the conduct of monetary policy and amid an environment of high expectations for inflation and worsening projections for the basic interest rate.

The option for maintaining the Selic occurred hours after the Central Bank of the United States announced an increase in its interest rate target by 0.25 percentage points, in addition to promising “continuous increases” in borrowing costs as part of its still unresolved battle. against inflation.

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