Brazil Maintains its Benchmark Interest Rate Unchanged

By Lise Alves, Senior Contributing Reporter

SÃO PAULO, BRAZIL – For the seventh consecutive meeting, the Brazilian Central Bank’s Monetary Policy Committee (COPOM) decided to leave the benchmark interest rate (Selic) unchanged at 14.25 percent per year. Due to the weakened economy and the negative economic data, this decision was already expected by analysts.

“The Committee recognizes the progress in disinflation policy, especially the containment of secondary effects of relative price adjustments. However, it considers that the high level of inflation in twelve months and the inflation expectations far from the objectives of the target regime offer no room for monetary easing,” stated the note released immediately after the meeting.

The maintenance of the benchmark interest rate was criticized by one of the country’s largest labor unions, Força Sindical. According to the union, the decision shows that the country’s monetary policy continues to benefit speculators, going against the interest of workers.

“The Copom continues bowing to speculators. The new government missed a great opportunity to signal to the productive sector, which generates jobs and income, that the country no longer praises opportunists,” said the release signed by union president, Paulo Pereira da Silva.

According to the Federation of Industries of the State of Rio de Janeiro (Firjan) the decision shows that inflation continues to persist and although recent changes in fiscal policies, by interim President Michel Temer, are positive, they will need to show results before interest rates are able to decline.

This was the last meeting led by Central Bank President, Alexandre Tombini, who is being replaced by Ilan Goldfajn. Tombini will take over as Brazil’s representative at the International Monetary Fund in Washington DC.