Copom mentions the end of the 6x1 scale to maintain high interest rates
The Central Bank's minutes also cite El Niño, rising oil prices, and dollar depreciation to justify maintaining the Selic at 13.75% per year, halting the rate cut cycle.
TL;DR
- The Copom maintained the Selic rate at 13.75% per year, halting the cycle of interest rate cuts.
- The decision was unanimous, driven by deteriorating inflation expectations, increased uncertainties, and economic slowdown.
- Factors influencing the decision include rising oil prices, El Niño's impact, the end of the 6x1 labor scale, and the real's devaluation.
- The Central Bank is concerned about public accounts and advocates for coordinated fiscal and monetary policies.
- The market does not expect further rate reductions, with projections indicating the Selic will remain at 13.75% until the end of 2026.