Alexandre Tombini, president of the Central Bank (Ueslei Marcelino / Reuters / SEE)
The Monetary Policy Committee (Copom) of the Central Bank decided to maintain the Selic basic interest rate of the Brazilian economy, at 14.25% per annum. The decision, expected by most analysts, was announced late on Wednesday. The BC interrupts thus a series of seven consecutive elevations of the base rate, which began in October last year.
The members of the Monetary Policy Committee decided to maintain unanimously. "The Committee understands that maintaining this level of the basic interest rate, for sufficiently long period is necessary for the convergence of inflation to the target at the end of 2016," said BC distributed note immediately after the vote. The Monetary Policy Committee said the decision came without bias, which signals new maintenance at the next committee meeting, scheduled for 20 and 21 October.
Elevations in following the Selic occurred under strong signs of inflationary pressure - and the increase in the basic rate is one of the instruments to contain the soaring prices. In Focus survey conducted weekly by the Central Bank with financial institutions, analysts predict an average inflation of 9.28% in 2015 - well above the central target established by the National Monetary Council of 4.5%.
Although today's decision on the Selic rate was expected by market analysts, who had not doubted new high on Wednesday. Soaring dollar, another driver for high inflation, gained momentum this week after the government presented a budget proposal for 2016 with shortfall of 30.5 billion reais. On Wednesday, the dollar closed up 1.95%, trading at 3.75 reais, its highest level since December 2002. In 2015, the accumulated value is over 41%.
