It will inject money into retail, but the potential for this movement to translate into cash will continue to come up against the financial cost raised by the still high interest rates in 2026. This was one of the messages taken from a Magalu press conference that took place last Monday (08) in São Paulo.
“There is a dichotomy. On the one hand, we know that there will be a demand… For example, it is an election year. Apart from the Income Tax reform, you have the gas voucher and several other measures that increase consumption. It is difficult to believe that there will not be increased consumption in an election year, but at the same time we cannot stick to it. I expected a drop in interest rates this year, which did not happen” stated Fred Trajano, CEO of Magalu.
The concern raised by the executive is that, even with the injection of demand expected in 2026, considering that 11 million families will stop paying Income Tax – – interest rates will remain at a high level, even with potential cuts, and will continue to hurt the company’s financial results, as happened this year.
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“There is no problem of demand, of revenue. The great difficulty is converting this revenue into results. What is happening is that the cost of capital is so high that the financial expenses have eaten into the companies’ results. The gross profit from sales is eaten by the financial expenses. Selling is not the problem, but converting sales into results is the big challenge in a country that has the highest interest rate in the world even with controlled inflation”, he assessed.
The executive shared the expectation that the beginning of the interest rate cut cycle will begin in January and fall below 11% by the end of the year, which would maintain Brazilian interest rates as the “highest in the world”, according to the CEO, but still representing a more optimistic scenario compared to the last Focus Bulletin, whose Selic forecast for 2026 increased by 12% to 12.25% per year.
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Online, Luiza Helena, president of Magalu’s administrative board, also criticized current interest levels. “There is no reason for interest rates to be at this level. We have good employment levels, we are out of the hunger map. Two things bring the market: income and credit. Income comes from employment, which is good, and credit… There is no inflation. It’s just that they set an inflation target of 3% and are aiming for that regardless of everything. I know they will criticize me, saying that I don’t know what the public deficit is, but the truth is that they are putting an end to small businesses. For us it is easier, but not for those who are small.”
But a considered vision did not nullify all the historical optimism of the Trajans. “My aunt always said that it’s during a crisis that it grows. If the cake is the same, let’s take someone’s piece that’s left over”, concluded Luiza Helena.
