BRAZIL ECONOMY: Selic Rate Should Return To 15% For The 1St Time Since 2006
BRAZIL The basic interest rate, Selic, should reach 15% or more in 2025, a level that has not been recorded since 2006. Currently, the interest is at 12.25% per year, but the monetary authority has indicated that it will increase it by 2 percentage points. According to the Focus Bulletin, financial agents predict a rise to at least 15% in July.
These estimates are part of the latest report of the Central Bank, released last Monday. However, some predictions are more pessimistic. Santander Brasil, for example, believes that it will be necessary to raise Selic to 15.50% by mid-2025. BTG, in turn, projects that the basic rate will end next year at 15.25%, while the median projections for the end of 2025 is 14.75%.
Gabriel Galípolo, Central Bank new president , takes command of the monetary authority in 2025 pressured, after being appointed by President Luiz Inácio Lula da Silva. Under his leadership, Selic should suffer at least two increases in the first months of the year. He will not be immune to criticism from Lula’s party, which has already spoken out against the current monetary policy. The Monetary Policy Committee (Copom) has already signaled that it will raise the rate in the next two meetings, with the base interest ending 2024 at 12.25% per year. In January and March 2025, the collegiate should increase the Selic by 1 percentage point at each meeting.
After Copom’s last decision in December, the president of the PT, Congresswoman Gleisi Hoffmann, made harsh criticisms of monetary policy and defended that Brazil needs a new approach. She also criticized Roberto Campos Neto, former president of the BC, who left office in December 2024, accusing him of doing “terrorism” to justify an even higher increase in the interest rate. Despite the criticism, the votes of the directors appointed by Lula had greater weight in the last Copom meetings, as confirmed by Galípolo, who stated that the transition of position with Campos Neto occurred amicably and without external influence.
The agents’s financial projection indicate that Selic will remain above 2 digits until at least the end of 2026, which would mean five consecutive years with the rate above 10%. Selic surpassed the 10% mark in February 2022.
translation The Hotspotorlando
source : Gazeta