Brasília – The Monetary Policy Committee housed under Brazil's Central Bank raised the basic interest rate (Selic) from 10% to 10.50% per annum as of Wednesday (Jan. 15). It was the seventh consecutive increase since April last year.
The committee reaffirmed its willingness to continue increasing the interest rate in order to hold down domestic consumer demand and curb inflation after it closed out 2013 at 5.91% – well above the annual mid-target 4.5% set by the Central Bank.
The Selic rate has risen 3.25 percentage points since April 2013 to reach 10.5 – and the outlook is that it will keep going up. According to a release by the National Confederation of Industry (CNI), while “everyone knows that high interest rates do slow down consumption, it also discourages private investments that help enhance industrial capabilities and create more jobs.”
Another concern is the impact of the Selic rate on government debt. According to the Department of Statistics and Socioeconomic Studies (Dieese), for every percentage point the rate goes up, the debt grows by some $2.560 billion/year.
Translated by Mayra Borges
Fonte: Basic interest rate raised to 10.50% p.a.
