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The Monetary Policy Committee (Copom) of the Central Bank decided on Wednesday (9), unanimously, to keep the Selic at the level of 2% per annum, at its lowest historical level.
“The Committee understands that this decision reflects its basic scenario and a balance of risks of variance greater than usual for prospective inflation and is compatible with the convergence of inflation to the target in the relevant horizon, which includes calendar years 2021. and 2022 ”, reported the BC in a note.
As a result, the decision of the monetary authority followed the expectations of analysts consulted by the BC in the last Focus newsletter, published last Monday.
For next year, the report indicates that the country’s basic interest rate should remain at 3% per year.
After all, how do you decide if there is a cut or not?
The Central Bank’s mission is to control the country’s inflation and, therefore, it uses the goal system as a basis. For 2020, the central inflation target is 4%, with a range of 2.5% to 5.5%. For 2021, the inflation target is 3.75%, with a range of 2.25% to 5.25%.
Every 45 days, the Copom meets to decide what the Selic will be like. The decision is based on various financial indicators of the country and, at the end of the meeting, the rate may vary, both up and down, in addition to remaining stable.
What is Selic?
Whenever we see any news or article focused on the financial market, we find this “Selic”. For those in this field, you certainly already know by heart its importance for the Brazilian economy, right?
On the other hand, for those who are entering this segment now there may be some doubt regarding this term.
It is nothing more than the basic interest rate in Brazil. Its acronym means Special Settlement and Custody System.
Therefore, Selic influences all other interest rates in Brazil, such as those charged on loans, financing and even on the return on financial investments, such as Treasury Direct securities.
The Selic rate was created in 1979, at a time when the Brazilian economy was facing a (hyper) inflationary scenario. Therefore, its objective has always been to contain inflation, since its variation, determined by the Central Bank, is directly related to the control of the increase in the price of products.
Photo: Central Bank / Disclosure
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