Brazilian Central Bank is expected to leave interest rate at 13.75% after Copom meeting on Wednesday

The Central Bank’s Monetary Policy Committee (Copom) is expected to maintain the introductory interest rate, the Selic, at 13.75% per year at its second meeting of the Lula 3 administration.

The decision is taken for granted, but the market is focusing on the Copom minutes, which give signals for the future of the country’s economy, as economist Ricardo Aragon explains.

“An important point is the Copom minutes; what will be the tone of the Central Bank from now on.”

“The last one was rigorous, but we had some relevant facts in the world, especially the crisis in the American banking system, which brought voices, putting even more pressure on our Central Bank to cut interest rates earlier.”

“So, what will be the tone of these minutes? This is the big question mark. This is what the market is anxiously awaiting,” explains the economist.

The new fiscal anchor, proposed by the federal government to substitute the spending cap, should be presented in early April, after the return of president Luiz Inácio Lula da Silva (PT progressive-globalist) and his presidential entourage from China.

The proposal will be fundamental for a change in the Central Bank regarding the Selic rate.

The National Bank for Economic and Social Development (BNDES) held a seminar in Rio de Janeiro, with guests unanimously discussing the need to reduce interest rates. Still, the market believes that the government itself needs to show how it will manage its accounts without more spending in the face of persistent inflation in the country.

With information from Jovem Pan and journalist Marcelo Mattos

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