BC Cuts Selic: Signals Caution in Future Inflation Outlook
The Copom cut the Selic rate by a second consecutive month, maintaining it at 14% per year. The decision was based on gradual inflation deceleration, though it remains above target. The Central Bank maintained a cautious stance regarding future monetary policy moves.
Yesterday, the Monetary Policy Committee (Copom) of the Central Bank decided to reduce the basic interest rate for the second consecutive month, leaving the Selic at 14% per year. This move was taken amid signs of gradual inflation deceleration, although it remains above the ceiling of the target defined for IPCA. The Copom expressed caution regarding future steps and indicated that monetary policy will be conducted with vigilance, considering the inflation expectations expressed in the Focus Bulletin and the Central Bank's projection for IPCA to reach 3.2% by the relevant horizon of monetary policy in 2028. However, Brazil’s economy continues to feel the prolonged effects of high interest rates, which are decelerating economic activities at a slower pace than expected. The global macroeconomic environment also reinforces this reality, where gradual reduction in interest rates in Brazil contrasts with international trends of monetary normalization. Nonetheless, projections for Brazil's GDP show stabilization in growth rates, reflecting an anticipated economic cooling over the next few years.
Source: Valor Econômico