The basic interest rate (Selic) rose from 2% per year in January 2021 to 11.75% per year in March this year, in nine consecutive increases promoted by the Central Bank’s Copom (Monetary Policy Committee). And now, at the next meeting, scheduled for May 3rd and 4th, can there be a new increase in the Selic rate? No Chat with Specialist, live program from UOLeconomist César Esperandio says it is “sure and sure” and explains the reasons.
Read his explanation and watch the program excerpt below. Chat with Specialist is a question-answer about investments exclusively for subscribers and is broadcast fortnightly, on Thursdays, from 15:00 to 16:00.
How to see the Selic projection
Copom decides the Selic rate at a meeting every 45 days. The last increase in the Selic rate (which went from 10.75% to 11.75% per year) took place on March 16th. On the Central Bank’s website, you can see the history of the rate and Copom’s announcements.
The Copom informs that it makes its decisions at each meeting “according to inflation expectations, the balance of risks and economic activity”.
The Selic’s main objective is to fight inflation. And that’s why they [Copom] are raising the rate, since our inflation has gone from 11% per year in the last 12 months.
César Esperandio, economist at Papo with Specialist at UOL Investimentos
In the last minutes, the Copom announced that it “anticipates another adjustment of the same magnitude” at the next meeting in May, that is, of 1 percentage point. “Therefore, the Selic would pass to 12.75% per year”, says the economist.
On the Central Bank’s website, you can find the economic outlook, with information on inflation and the Selic rate, among others.
The Focus Report brings the Selic projections compiled by the Central Bank of the country’s main economists and investment banks. The document is always released on Mondays at 8:25 am. In the report released last Monday (26), the projection for inflation until the end of the year was 7.65% – four weeks ago, it was 6.86%.
“Potentially, the Central Bank and the market are expecting a slightly higher Selic by the end of the year, to combat a perspective of higher inflation”, says Esperandio, who is also from the Econoweek channel.
Higher Selic impacts investments
Esperandio said that the rise in the Selic rate impacts investments.
Higher Selic impacts on Selic Treasure yielding more. All fixed income bonds raising their rates of return.
“And there are other developments, such as a migration from variable income to fixed income”, he says. For him, making this migration is not a recommended decision. “On average, they are investments with different strategies”.
The economist also declares that the Selic interferes directly in the daily life of Brazilians. “For example, when the Selic goes up, so does the financing rate, if your installment is linked to post-fixed interest. That is, it gets more expensive. It also interferes with the contracting of new credits, borrowings, etc.” , it says.
Therefore, according to him, there is less consumption. “And with less consumption, the shopkeepers, the producers have a smaller stimulus to continue raising prices so much. This is one of the ways to fight inflation. It is the most effective tool we have in the market”.
It is worth mentioning that the information conditions mentioned here refer to the 20th of April. Fees may vary from day to day.
Chat with Specialist is fortnightly
The program Chat with Specialist is broadcast on Thursdays, fortnightly, from 3 pm to 4 pm, on the home page of UOL, at UOL Economia and UOL Investimentos, and is exclusive to subscribers. Review past programs here.
You can send questions to Papo by e-mail [email protected] —they can be answered in the program.
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