The Central Bank's Monetary Policy Committee raised the basic interest rate from 9.25% to 10.75% per year this Wednesday (2).
Since July 2017, the Selic rate has been below double digits, a period in which it was reduced in the face of falling inflation and virtually stagnant economic activity.
The Central Bank also signaled that the tightening cycle started in March last year has not come to an end, in the face of still resistant inflation that threatens to burst the target for the second year in a row. But it said in its statement that, in terms of its next steps, the committee sees a reduction in the pace of adjustment of the basic interest rate at its next meeting as more appropriate at this time.
According to Copom, this signal reflects the fact that the cumulative effects of the monetary tightening cycle will still manifest themselves over the next few months. At the previous meeting, in December, the Central Bank also raised the rate by 1.5 percentage points and indicated that it would make a new high of the same magnitude at the beginning of the year.
Translated by Kiratiana Freelon