Central Bank: economic uncertainties justify interest rate at 14.25% per annum

Most members of the Central Bank's Monetary Policy Committee (COPOM) declared they have reasons to believe that the uncertainties associated with the recovery of fiscal results as well as the behavior of the inflation and the expectations regarding it persist. As a result, during their March 2 meeting, the committee chose for the fifth consecutive time to maintain the SELIC benchmark rate at 14.25% per annum. The decision can be found in the meeting minutes released Thursday (10).

The minutes further highlight that the uncertainties regarding the external scenario have also remained unchanged, most noticeably the concern over the Chinese economy and its developments, as well as the evolution of prices in the oil market.

According to COPOM, both the foreign and domestic environments should be further observed, along with their impact on the risks facing the inflation, which, coupled with the adjustments implemented in the monetary policy, may help bring the inflation to the 4.5% target in 2017.

On the other hand, the forecast for the inflation was raised for both 2016 and 2017 above the center of the 4.5% target in case the exchange rate stands at R$ 3.95 and the SELIC rate at a yearly 24.25% in a reference scenario, covering “the whole of the relevant horizon.”

Translated by Fabrício Ferreira