With the further increase in the Selic rate by the Copom, Brazil consolidates its leadership and is the country with the highest rate in the whole world, at 8.10% per year.
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The Monetary Policy Committee (Copom) increased the Selic rate to 13.25% per year. And so, this is the result of the impacts of the war in Ukraine and the global economy. This is the highest interest rate since January 2016. As a result, Brazil continues to have the highest real interest rate in the world.
According to financial experts, the rise in the Selic rate from 12.75% to 13.25% was no surprise. The estimate is that the new highs will be announced soon, by Copom. This was the 4th meeting of the Central Bank committee this year.
With the anticipation of a new readjustment in the next meetings, the increase may once again be 0.5. In a statement, the Copom mentions that the next change should be of equal or lesser magnitude.
The Copom also highlighted that other risk factors for the Selic are global inflationary pressures. AND “the uncertainty about the future of the country’s fiscal framework and fiscal policies that imply support of aggregate demand, partially incorporated into inflation expectations and asset prices”.
In short, this is already the 11th readjustment in the Selic rate. In addition to the war in Ukraine, the rise is a result of rising inflation and tensions in the financial market. The rise in the Selic rate is the way to try to control inflation.
Higher interest rates make credit more expensive, and tend to discourage production and consumption. And the problem is that this makes it difficult for the economy to recover. With this increase by the Central Bank, Brazil consolidates its leadership and is the country with the highest real interest rate in the world, at 8.10% per year. That’s what Infinity Asset Management points out.
Finally, the survey takes into account the real interest rates of 40 countries. According to the survey, Brazil is ahead of Mexico, Colombia, Chile and Indonesia. The United States ranks 25th with negative annual real interest rates of 3.07% per year.
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