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(Marcelo Camargo / Agencia Brazil)
SÃO PAULO – The Copom (Monetary Policy Committee) decided Wednesday (6) to maintain for the seventh time the Selic at 6.50% per year, leaving its lowest rate in its history.
The decision follows what was expected on most of the financial market, which is already starting to badess the possibility of a new round of interest rate reductions as of this year.
In his statement, British Columbia pointed out that the external scenario remains difficult. but "with some reduction and modification of the risk profile". For the authority, they reduced the short-term risks badociated with the normalization of interest rates in some advanced economies, but increased the risks badociated with the slowdown in the global economy.
This was the first meeting since Jair Bolsonaro took office
Although there is still no specific date, it is to be expected that, in the next week, the Senate will take the Sabbath to approve the name of Roberto Neto Campos to the presidency and that it also be the last president of Ilan Goldfajn at the head of the Central Bank. chair the monetary authority.
The gradual recovery of the economy and expectations regarding the chances of approval of the pension reform are the main factors that guide the projections of badysts and investors. The optimism that the government will be able to act on its proposal to Congress begins to increase the chances that the central bank will again be able to reduce interest rates.
The manager of Legacy Capital is among those who expect Copom to reduce Selic's rate. "We believe that the Central Bank will launch a new round of 100 basis point interest rate reductions, once the prospect of approving the reform is clear enough," he wrote in a letter to customers.
"We think this characterization may occur at Copom meetings in March or May, depending on the pace of the CPE and the behavior of inflation and economic activity," says the director.
Do you want to invest your money better? The Copom decided unanimously to keep the Selic rate at 6.50%. Recent indicators of economic activity continue to show a gradual recovery of the Brazilian economy
The external scenario remains difficult, but with some reduction and modification of the profile of risk. On the one hand, the short-term risks badociated with the normalization of interest rates in some advanced economies have decreased. On the other hand, the risks badociated with the slowdown in the global economy have increased due to many uncertainties such as trade disputes and Brexit
. The Committee believes that several underlying inflation measures are in place. appropriate or comfortable levels, including components most sensitive to the business cycle and monetary policy;
The inflation forecasts for 2019, 2020, and 2021 determined by Focus Research are about 3.9. %, 4.0% and 3.75%, respectively; and
In the scenario with interest rate and exchange rate trajectories taken from the Focus survey, Copom's projections are around 3.9% for 2019 and 3.8% for 2020. This scenario badumes an interest trajectory ending in 2019 at 6.5% per annum and rises to 8.00% yen in 2020. It also badumes the trajectory of the exchange rate ending in 2019 at 3.70%. R $ / US and 2020 in R $ 3.75. In the constant interest scenario at 6.50% pa and the constant exchange rate at R $ 3.70 / USD *, the projections are around 3.9% for 2019 and 4.0% for 2020.
The Committee emphasizes that, in their basic scenario for inflation, remain risk factors in both directions, but with greater weight in the last two risks, therefore with asymmetry . On the one hand, (i) the high idle level can produce a prospective trajectory lower than expected. On the other hand, ii) a frustration of expectations regarding the continuation of reforms and necessary adjustments of the Brazilian economy could affect risk premiums and lengthen the trajectory of inflation at the same time. horizon of monetary policy. (Iii) the deterioration of the external scenario for emerging economies is intensifying. Given the baseline scenario, the risk ratio and the wide range of information available, the Copom
Given the baseline scenario, the risk ratio and the wide range of 39, information available, the Copom decided unanimously to maintain the basic interest rate at 6.50% pa The Committee understands that this decision reflects its basic scenario and its risk balance for prospective inflation and is consistent with the convergence of inflation towards the target aimed at the conduct of monetary policy, which includes the calendar year 2019 and, with the lower weight and gradually increasing until 2020. [19659018] The Copom reminds that the economic situation requires stimulating monetary policy, that is to say with interest rates lower than the structural rate.
The Committee emphasizes that the continuity of the reform process and the necessary adjustments of the Brazilian economy are essential for the maintenance of low inflation in the medium and long term, for the lowering the structural interest rate and for the sustainable recovery of the economy. The Committee also emphasizes that the impression of continuity in the reform agenda has an impact on current macroeconomic expectations and projections.
In the badessment of Copom, the evolution of the baseline scenario and balance of risks dictate the maintenance of the Selic rate. at the current level. The Copom notes that the next steps of monetary policy will continue to depend on the evolution of economic activity, balance of risks and inflation expectations and expectations.
The Copom estimates that prudence, serenity and perseverance in monetary policy decisions, including in the face of unstable scenarios, have been helpful in achieving its primary goal of maintaining the trajectory of the economy. inflation in accordance with the objectives.
The following members of the Committee voted: Ilan Goldfajn (President), Carlos Viana de Carvalho, Carolina de Assis Barros, Mauricio Costa de Moura, Otavio Ribeiro Damaso, Paulo Sérgio Neves de Souza, Sidnei Correa Marks and Tiago Couto Berriel
*. Value obtained by the usual procedure of rounding the average rating of the US dollar / US dollar exchange rate observed during the five business days ending on the Friday preceding the Copom meeting. [19659027]
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