Economy

Central Bank keeps economy's basic interest rate at 13.75% per year

This is the third time in a row that the Selic rate remains unchanged

Wellton Máximo

Published on 08/12/2022 - 09:18

Agência Brasil - Brasília

Edifício-Sede do Banco Central em Brasília — © Marcello Casal JrAgência Brasil

Despite the recent hike in inflation, the Central Bank (BC) did not change interest rates. By unanimity, the Monetary Policy Committee (Copom) kept the Selic rate, the economy's basic interest rate, at 13.75% per year. The decision was expected by financial analysts.

As in the last few times, Copom kept the warning that it may raise the Selic again if inflation does not fall as expected. In a statement, the committee cited "the high uncertainty about the future of the country's fiscal framework and additional fiscal stimulus" as factors that increase the risk of inflation rising. On the other hand, it mentioned a possible fall in commodity prices (primary goods with international quotation) and a "sharper deceleration in the global economy" as elements that can push inflation down.

Inflation

The Selic rate is the Central Bank's main instrument to keep official inflation under control, as measured by the National Wide Consumer Price Index (IPCA). In October, the indicator closed at 6.47% in the 12-month accumulated. This was the first month of positive inflation after three consecutive deflations, motivated by the rise in fuel and food prices.

Despite the IPCA slowdown from July to September, the figure is above the inflation target ceiling. For 2022, the National Monetary Council (CMN) set an inflation target of 3.5%, with a tolerance margin of 1.5 percentage points. The IPCA, therefore, could not exceed 5% this year nor fall below 2%.