Brazil’s base interest rate SELIC to soar to 6.5% this year – Focus survey
RIO DE JANEIRO, BRAZIL – The projection for the benchmark interest rate at the end of this year has risen again in the Central Bank’s Focus survey after the authority raised it last week and announced its intention to continue monetary tightening and abandon the term “partial normalization.”
The market now sees the SELIC at 6.50% at the end of 2021, up from 6.25% in the last survey. For 2022, the projection remains that the rate will stay at 6.50%.
The SELIC rate is the Brazilian equivalent of the U.S. federal funds rate.
The move comes after the Central Bank raised the key interest rate for the third consecutive time by 0.75 percentage points to 4.25%.
The Monetary Policy Committee (Copom) has also abandoned the term “partial normalization” in reference to the current rate hike cycle, stating that it intends to tighten rates more than previously indicated and raise the SELIC to a level considered neutral.
Attention now turns to the release of the minutes of Tuesday’s meeting, looking for more clues about the regulator’s next moves.
The projection for inflation this year also rose again at Focus, reaching 5.90% from 5.82% previously, well above the target – 3.75% with a tolerance margin of 1.5 percentage points more or less. The estimate for 2022 remains at 3.78%, above the central target of 3.50%.
For gross domestic product (GDP), growth estimates were 5.00% for 2021 and 2.10% for 2022, up from 4.85% and 2.20%, respectively, the previous week.
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