The Central Bank decided this Wednesday (22) to maintain the basic interest rate, the Selic, at 13.75%, despite pressure from the government and various sectors of society for it to be reduced.
Shortly before, the Minister of Planning and Budget, Simone Tebet (MDB), had declared that she believed that the Selic rate would fall in early May, with the presentation of the proposal for a new fiscal rule.
Read more: Understand how the Selic rate affects your life and the entire economy
The Central Bank’s decision was taken after two days of meetings. The Lula government wants a reduction in the rate to stimulate economic growth. The Central Bank, on the other hand, defends high interest rates on the grounds of containing inflation.
Read more: On the streets across the country, centrals and movements pressure Copom to lower interest rates
The bank has the power to decide the basic interest rate of the Brazilian economy since it started to enjoy autonomy in 2021, in the Bolsonaro government. Brazil has the highest real interest rates (inflation discounted) in the world, according to studies. Experts claim that this situation favors financial speculation to the detriment of the real economy, which generates jobs.
Selic has been maintained at 13.75% since September 2022, when a 12-month cycle of increases was interrupted.
new rule
On Wednesday morning, Tebet told the radio Capital 95 Campo Grande that the Selic should be reduced at the next Copom meeting, in early May, after the presentation of the proposal for a new fiscal rule.
“Just by presenting the framework and if it is good, this will allow interest rates to start to fall. With interest rates falling, it means that everything will be cheaper in the supermarket and the productive sector will have loans at lower interest rates”, said Tebet .
The so-called fiscal framework is the federal spending control rule, which is being prepared by the finance minister, Fernando Haddad (PT). It has not yet been disclosed in its entirety, but some points have been presented by Haddad to party leaders.
One of them is a trigger for cost containment, in case the public debt reaches a certain level. In this case, the rule provides for a limit on spending on civil servants’ salaries and a veto on the granting of subsidies. The expectation is that the text of the framework will be known later this week, before the presidential trip to China.
USA
The US Central Bank (Fed, or Federal Reservein English) also announced this Wednesday a new increase in basic interest rates in the country, from 4.75% to 5%, growth of 0.25%.
There was an expectation among economists that the recent banking crisis, which led to the collapse of the Silicon Valley Bank (SVB) and the Signature Bank, would cause the interruption of interest rate hikes in the country. But when announcing the new increase, the US Central Bank failed to mention the term “continuous increases” in interest rates, as it had done since the beginning of the rise in interest rates, in the first half of 2022.
This would be, according to experts, a sign that rates can be stabilized. The expectation is that interest rates in the US economy will rise by 0.25% by December, as had been predicted by the Fed itself.
Editing: Rodrigo Durão Coelho
