The Central Bank signaled that it will reduce the rate of increase in the Selic rate in a statement released this Wednesday (2), when it raised the basic rate of the economy by 1.5 percentage points, to 10.75% per year.
“By signaling a more moderate increase, the BC is also indicating to the market that it will not be able to reach the target this year, it will work towards the target in 2023. In doing so, it aims at the positive effect of preventing activity from decelerating more intensely. ”, says CNN economics expert Sergio Vale.
“If the institution had signaled greater pressure on interest rates to try to bring inflation to the target already this year, it would have followed with 1.50 percentage points to the next meeting, and so on, and would have led to a possible recession in 2022” , it says.
The market expects inflation to end the year at around 5.5%, above the 5% target for 2022. Last year, the indicator also extrapolated the measure, but with greater intensity.
If, on the one hand, the monetary tightening cycle has the objective of holding back the rise in prices, on the other hand, the collateral effect of this policy is to reduce the pace of activity, as consumers tend to be more restrained, as credit is more expensive.
See full interview in the video.
Source: CNN Brasil
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