In the early evening of this Wednesday (6), the Monetary Policy Committee (Copom) of the Central Bank (BC) announced the decision to raise the basic interest rate (Selic) from 10.75% to 11.25% per year. year, an increase of 0.50%. The increase in the Selic rate was agreed by all Committee members.
According to the Copom, “the decision is compatible with the strategy of inflation convergence around the target over the relevant horizon”.
“Without prejudice to its fundamental objective of ensuring price stability, this decision also implies smoothing fluctuations in the level of economic activity and promoting full employment,” the Committee said in the statement.
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The Copom also demanded the “presentation and execution” of fiscal measures that contribute to monetary policy and reduce inflation.
“The Committee reaffirms that a credible fiscal policy committed to debt sustainability, with the presentation and execution of structural measures for the fiscal budget, will contribute to anchoring inflation expectations and reducing risk premiums on financial assets, consequently impacting monetary policy”, says an excerpt from the statement.
“The Committee has been closely monitoring how recent fiscal policy developments impact monetary policy and financial assets. The perception of economic agents about the fiscal scenario has significantly affected asset prices and agents’ expectations, especially the risk premium and the exchange rate”, says another excerpt.
Scenario
According to the Central Bank, the scenario continues to be marked by resilience in activity, pressures in the labor market, a positive output gap, rising inflation projections and unanchored expectations, “which demands a more contractionary monetary policy”.
“The pace of future interest rate adjustments and the total magnitude of the monetary tightening cycle will be dictated by the firm commitment to convergence of inflation to the target and will depend on the evolution of inflation dynamics, especially the components most sensitive to economic activity and the monetary policy, inflation projections, inflation expectations, the output gap and the balance of risks”, he informed.
