Central Bank president says indication of new interest rate hike remains next week

The basic interest rate is already at 14.25%. The Central Bank has stated that raising the Selic is necessary to slow down the economy and reduce inflation, so that the index returns to the targets.

The president of the Central Bank, Gabriel Galípolo, stated this Tuesday (29) that the indication from the Monetary Policy Committee (Copom) that a new increase in the basic interest rate will be necessary in May still holds.

The information was disclosed during a press conference about the Financial Stability Report (REF) for the second half of 2024.

"The intention was to say that everything that was stated in the previous communication is still valid. We will set the interest rate at a level that is restrictive enough and at the level necessary to meet the [inflation] target," he added.

In March, the Central Bank's Monetary Policy Committee (Copom) raised the basic interest rate of the economy to 14.25%. This is a level similar to that recorded during Dilma's government, in 2015 and 2016.

At the same time, the Central Bank also indicated that it will implement a new increase in the Selic rate in May, at the next Copom meeting, but with less intensity (below one percentage point).

The Central Bank has reiterated that a slowdown in the level of activity is necessary to reduce inflation and bring it back to the targets.

In the monetary policy report released in March, the institution reported that the so-called "output gap" remains positive. This means that the economy continues to operate above its potential growth without putting pressure on inflation.

This week, Galípolo stated that the signs of economic slowdown are still very initial and that it is necessary to maintain vigilance over price behavior.

Interest rate policy

🔎The basic interest rate of the economy is the main instrument of the Central Bank to try to contain inflationary pressures, which mainly affect the poorest population.