Central Bank President Gabriel Galipolo said on Monday that it is still early to talk about any change in the basic interest rate and that the BC will need to keep Selic at a high level longer.
“Given what happened last year, given the level of discouraging we have of expectations, we are aware that this time we need to stay in this interest rate longer at a restrictive level,” Galpolo said during Goldman Sachs event in Sao Paulo. The monetary authority also pointed out that the possibility of interest reduction is not under discussion in the monetary policy committee, the Copom.
Since September last year, the central bank collegiate has already held six consecutive increases from Selic, which accumulates an increase of 4.25 percentage points, going to 14.75% per year – the highest level in almost two decades.
In the minutes of the last meeting, Copom kept the next steps open and repeated the statement of the statement about the need for caution and flexibility. The high level aims to cool the economy, but the impacts have not yet been felt.
The PIB preview, the IBC-BR, released by the Central Bank itself, exceeded expectations. The index brought a 0.8% increase in March, accumulating 1.3% in the quarter. The dynamism of the economy is one of the points that draw the attention of the president of the Central Bank.
“How do you live with interest rates at a level that, for any other country, would be quite restrictive? And yet, you are watching the lowest level of unemployment in the historical series, the highest income level in the historical series, you have a number of data that are demonstrating a high dynamism economy, although you are living with interest rates that would be understood as quite restrictive in any other economy,” Galipolo said.
Analysts, the expectation is that the discharge of interest starts to take effect later this year, which has led the latest projections in the Focus Bulletin to the 2025 IPCA to be reviewed down after months of discharge. In March, the official inflation recorded in 12 months was 5.48%, far from the target ceiling of 4.5%.
During the event, Gabriel Galipolo reinforced the institution’s commitment: “The Central Bank will pursue the inflation target, our mandate is, put the interest rate at a sufficient restrictive level, as long as necessary, to pursue the inflation target.”
