Entities in the productive sector remain on alert about the restrictive level of the country’s basic interest rate, the Selic, even after the cut on Wednesday (29).
“It is still insufficient”, commented the CNI (National Confederation of Industry) in a note after the BC (Central Bank) announced the . According to the entity, the “current interest rate worsens the economy’s situation”.
“The cost of capital will remain at a prohibitive level, making projects and investments that could increase industrial competitiveness unfeasible. At the same time, the indebtedness of companies and families hits records month after month, weakening the financial health of the entire economy”, highlights Ricardo Alban, president of the entity.
The executive argues that the BC intensifies the cuts in the Selic from the next Copom (Monetary Policy Committee) meeting.
“A lower interest rate is no longer just desirable and has become essential to recover the productivity and well-being of the Brazilian population”, adds the president of the CNI.
Fiemg (Federation of Industries of the State of Minas Gerais) highlights that maintaining a contractionary monetary policy tends to deepen the weakening of economic activity, with negative impacts on the generation of jobs and income.
The chorus is reinforced by the CBIC (Brazilian Chamber of Construction Industry), whose reservation is that, even with the fall in the Selic, high interest rates compromise the expansion of the real estate sector and reduce the pace of investments.
“Civil construction, a strategic sector for national development, directly feels the effects of this scenario. The high interest rate environment compromises the sector’s expansion capacity and reduces the pace of investments necessary to sustain the country’s economic growth”, says the entity.
“Although inflation continues to require attention, especially given the increase in food and transport prices and international geopolitical uncertainties, it is essential that the country gradually moves towards an interest rate environment that is more compatible with its development needs. Continuing the Selic reduction cycle is important, but Brazil needs to accelerate the construction of a macroeconomic scenario that favors investment, production and competitiveness”, he points out.
However, FecomercioSP (Federation of Commerce of Goods, Services and Tourism of the State of São Paulo) recognizes that the scenario is under pressure for the BC, considering the unanchoring of inflation expectations.
Furthermore, he points out that “there is a third element at stake: public accounts”.
“Fragile, without any type of concrete progress towards structural control and with rapidly growing mandatory expenses, they require the BC to have some management, which happens through high interest rates. In fact, it is clear that the body will only have a stronger stance to deepen the cycle of Selic cuts when the government has a clear commitment to promoting fiscal balance”, indicates the retail entity in a note.
The perception is pessimistic: considering the upcoming election year, FecomercioSP warns of an increase in public spending and, consequently, a “high Selic rate for longer than the market expected, ending the year at around 13%”.
Paulo Skaf, president of Fiesp (Federation of Industries of the State of São Paulo) states in a succinct note to the press: “this is an unsustainable scenario”.
