He Central Bank of Brazil This Wednesday, it reduced the basic interest rate by 0.50 percentage points, which now stands at 12.75% annually, the lowest level in the last 16 months, the issuing body reported.
The reduction in the cost of money in Brazil was the second consecutive (in August it had also been reduced by 0.50 percentage points), with which rates fell by one percentage point compared to the 13.25% annual in which it was until July.
The Central Bank only began the process of gradually reducing interest in August despite strong pressure from the Government since the progressive Luiz Inácio Lula da Silva assumed the Presidency in January of this year.
Although the issuer claimed that it needed to raise the cost of credit to stop inflation, Lula stated that the price rate had already fallen to its lowest level in a long time and that high interests harm the country’s economic growth.
The Selic, as Brazil’s basic interest rate is known, remained at the 13.75% annual, its highest level since November 2016, in the last three years and until August.
The reduction in rates was decided unanimously by the members of the Monetary Policy Committee (Copom) of the issuer, who argued that Brazil’s economy is growing but that a slowdown is expected in the coming months.
According to the directors of the Central Bank, with the economy slowing down, as long as inflation is under control, new interest reductions are foreseeable.
The issuer stated that, despite the fact that the reduction in inflation allows the cost of money to decrease, it is still paying attention to prices since “There are risks of increases due to a greater persistence of global inflationary pressures.”
Market economists lowered their projection for inflation this year from 4.93% until the 4.86%therefore, if such forecast is met, the price index in 2023 will be slightly above the ceiling of the Central Bank’s goal for the year (4.75%) but below that recorded last year (5.79%).
The same analysts predict that inflation will continue to decline and that in 2024 it will be at 3.86%.
Source: Gestion
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