Finance minister surprised with maintenance of interest rate at 13.75%
Brazil’s Finance Minister Fernando Haddad, on Wednesday night (Mar. 22), considered Central Bank Monetary Policy Committee Copom’s decision to maintain the Selic basic interest rate at 13.75 percent a year and the tone of its statement "very worrisome." In the note, the committee pointed out the possibility of new interest rate hikes, if necessary.
"At a time when the economy is shrinking, Copom is signaling a rise in interest rates…which is really quite worrying," he stated. "Today we released a bimonthly report showing that our January projections for the public accounts are being confirmed," Haddad added.
The minister said he was surprised with the bank's decision, precisely on a day when the government released new estimates that indicate an increase in revenues and a reduction in the primary deficit in relation to the amount sanctioned in the budget.
For Haddad, the release of the report demonstrates the government's commitment to rebalancing public accounts. According to him, this would be a reason for the Central Bank to start easing monetary policy, instead of hardening the tone of the statement.
Brazil is in a different situation compared to the main international economies, which is why an increase in the Selic rate at this moment is not justifiable, even though the U.S. Federal Reserve Bank raised basic interest rates by 0.25 percentage points yesterday (22), the minister said.
