Copom demonstrates that it does not welcome further reductions in the basic interest rate

The minutes of the last meeting of the Monetary Policy Committee (Copom) revealed the assessment of the Central Bank body that it is necessary to be “cautious” in the definition of the basic interest rate (Selic). The document was disclosed on Tuesday, 11, and concerns the Committee's meeting that took place last week. It was at this meeting that the basic rate was reduced from 4.5% to 4.25%, which led the Selic to reach its new historic low.

According to the Committee's minutes, the interest rate cuts that were carried out had lagged effects. Therefore, the agency understands that it is necessary to stop the reduction of the basic rate. Even so, he did not eliminate the possibility that the Selic rate will be lowered again. Do you want to know more about what the Copom discussed at its meeting? Then keep reading our article!

Details on the Copom minutes regarding the basic interest rate

According to the document released today, the agency's next steps will remain dependent on the evolution of economic activity. In addition, the Copom will also have to take into account the risk balance, as well as inflation projections and expectations, “with increasing weight for the calendar year 2021”. Therefore, the Committee ended up leaving open the possibility of an increase in the Selic rate.

It is worth remembering that this assessment by the agency was carried out before the January IPCA was released. The inflation rate for the month was 0.21%, the lowest in January since the start of the Real Plan (July 1994).

It is also important to mention that the Central Bank's main objective is to control inflation. To achieve this, he relies on the target system. The percentage that was defined for that year was 4%. Still, inflation can vary by 1.5 percentage points down or up. Next year, the established target was 3.75%, which could reach 2.25% or 5.25%.

Final considerations

Having said that, we News Report we hope to have clarified the position of the Copom regarding the reduction of the basic interest rate. Tell us, in the comments, if you agree with what was disclosed by the body in its minutes. In addition, we invite you to continue following our website! That's because we'll keep you informed about the main news about the country's economy and the rest of the world!

Source: G1