Key interest rate increased to 12.25% p.a.
The Central Bank has raised the key interest rate (SELIC) for the third consecutive time. During a meeting on Wednesday (Jan. 21), the bank's Monetary Policy Committee (COPOM) unanimously decided to increase the SELIC rate by 0.5 percentage point to 12.25% per annum, reflecting its monetary tightening policy. At the previous meeting in early December, the rate had already been adjusted by 0.5 point. As of the latest increase, the SELIC is now at its highest level since August 2011's 12.5% p.a.
The SELIC rate is used to keep the official inflation within the target established by the economics panel – 4.5% mid-target, plus or minus 2 percentage points for a full range of 2.5% (floor) to 6.5% (ceiling).
COPOM said that the decision to raise interest was motivated by the macroeconomic scenario and the outlook for inflation. Although it does help keep prices under control, increasing the SELIC rate can slow down the pace of economic recovery while still under the effects of government stimuli including tax exemptions and cheap credit.
The SELIC rate applies to public bond trading and provides a benchmark for other interest rates. Adjustments are designed to contain excessive demand by making credit more expensive to control inflationary pressures, while also stimulating savings.
Translated by Mayra Borges
Fonte: Key interest rate increased to 12.25% p.a.
