CNI criticizes Selic increase: ‘Mistaken decision’ | Economy

CNI criticizes Selic increase: 'Mistaken decision'
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CNI criticizes Selic increase: ‘Mistaken decision’

The increase in the Selic rate (basic interest rates in the economy) to 13.25% per year was met with criticism by the productive sector. For industry entities, the wrong decision will harm the recovery of the economy. In a note, the National Confederation of Industry (CNI) reported that the Selic rate is at a level that inhibits economic activity. For the entity, the increases made this year are reflected in a high real rate (interest minus inflation), at a time when inflation begins to decelerate.

“This additional interest rate increase is currently unnecessary to control inflation and will bring additional costs to the economy, such as a drop in consumption, production and employment,” said CNI president Robson Braga de Andrade in a note.

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For the confederation, the National Consumer Price Index (IPCA) for May showed that the prices of industrial goods began to decelerate and will continue to do so in the second half of the year, still reflecting previous interest rate increases. The entity also highlighted that international prices of agricultural goods and energy show stability, after the incorporation of the shock caused by the conflict in Ukraine.

Firjan

In a note, the Federation of Industries of Rio de Janeiro (Firjan) considers that the Selic cannot be the only instrument to circumvent the generalized picture of price increases that plague the Brazilian economy. “The Covid-19 pandemic and later the war in Ukraine highlighted structural problems around the world. The Brazilian productive sector still lives with the effects of rising production costs and the population suffers from the deterioration of income”.

The entity’s note says that the continuation of the cycle of interest rate hikes, albeit to a lesser extent, is doubly undesirable. “First, because it sacrifices even more economic activity, which is already showing clear signs of weakness. Second, because it adds a warning factor in the fiscal sphere by raising the cost of public sector indebtedness”, he evaluated.

Firjan also informed that other measures are being sought that could lead to a persistent drop in inflation and a sustainable resumption of growth. “It is necessary to maintain fiscal responsibility and preserve the basic needs of the population. The federation reaffirms that, faced with a scenario of high uncertainty, a more moderate monetary policy is essential and that meets the country’s economic growth challenges”, he highlighted.

The Monetary Policy Committee (Copom) decided today (15) to raise the Selic rate, the basic interest rate for the economy, from 12.75% to 13.25% per year. After two consecutive increases of 1 percentage point, the rate was raised by 0.5 point.

About Yadunandan Singh

Born in 1992, Yadunandan approaches the world of video games thanks to two sacred monsters like Diablo and above all Sonic, strictly in the Sega Saturn version. Ranging between consoles and PCs, he is particularly fond of platform titles and RPGs, not disdaining all other genres and moving in the constant search for the perfect balance between narration and interactivity.

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