Brazilian Central Bank keeps Selic interest rate at 13.75%

On Wednesday, the Central Bank’s Monetary Policy Committee (Copom) decided to maintain the Selic, the basic interest rate, at 13.75% per year.

This was Copom’s first meeting in 2023.

For the Central Bank, the maintenance of the Selic rate comes in the wake of inflationary pressures resulting from the deceleration of growth in the domestic and external environment.

The Committee also believes the uncertainty surrounding its premises and projections is more significant than usual.

The Central Bank relies on the inflation targeting system to set the interest rate level.

When inflation is high, the Central Bank raises the Selic. When inflation estimates align with the targets, the Central Bank can reduce the economy’s basic interest rate.

The Federal Reserve on Wednesday raised its basic interest rates by 0.25 percentage points, reaching 4.75%.

This is the eighth consecutive increase. According to the Fed’s board, new hikes are expected.

The “anticipation” of future hikes is a tool to maintain inflation at 2% a year.

Jerome Powell, Fed president, ruled out a possible interest rate cut this year.

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