By raising the Selic (the basic interest rate) by 1.00 percentage point, from 11.75% to 12.75% per year, the Monetary Policy Committee (Copom) maintained its assessment that its balance of risks for inflation continues with factors in both directions, but urged caution in assessing the scenario. “The Committee assesses that the particularly uncertain and volatile environment requires serenity in the assessment of risks”, highlighted the BC.
The collegiate changed the format of presentation of the balance sheet, putting the risks of rising inflation in the first place, when normally the communiqué opened this paragraph by the risks of low inflation. The Copom failed to mention that it considers an upward asymmetry in the balance of risks.
Among the risks of higher-than-projected inflation, the Copom highlighted for the first time “a greater persistence of global inflationary pressures”. The collegiate also started to include more directly in the upside risks the “uncertainty about the future of the country’s fiscal framework”, although it repeated that this uncertainty would already be partially incorporated in inflation expectations and in asset prices.
At the other end of the risk balance, the BC once again mentioned a possible reversal, albeit partial, of the increase in international commodity prices in local currency. And, also for the first time, he pointed out the risk of a more accentuated deceleration of economic activity than projected.