THE Monetary Policy Committee (Copom) of Central Bank (BC) Brazil's benchmark interest rate, the Selic, was reduced on Wednesday (5) by 0.25 percentage points to 14.00% per year, as expected by the vast majority of investors. This was the fourth consecutive cut of this magnitude, decided unanimously by the members of the central bank. With this, the rate is 1 percentage point below the level observed in the same period last year. In a statement, the Copom (Monetary Policy Committee) assessed that the external environment remains undefined due to the uncertainty surrounding armed conflicts in the Middle East and the uncertainty about monetary policy in some advanced economies. "This scenario requires caution on the part of emerging countries in an environment marked by increased volatility in asset and commodity prices," it states. Regarding the domestic scenario, the Committee assesses that the set of indicators released since the last meeting suggests a gradual moderation of economic activity, although still at a resilient level, with mixed signals across sectors, and a heated labor market. "In the most recent releases, headline inflation has slowed, but remains above the upper limit of the target, while underlying measures have slowed to a level slightly below the upper limit of the target," it details. The next meeting of Copom The meeting is scheduled for September 15th and 16th. The body did not give clear indications of the next steps, but pointed out that the current scenario, characterized by a significant increase in uncertainty, unanchoring of expectations, and high risks surrounding the baseline scenario, demands serenity and caution in the conduct of monetary policy. "The Committee will continue to monitor the evolution of the scenario in order to maintain the appropriate constraint to ensure the convergence of inflation to the target," it stated.
This text was translated by machine from Brazilian Portuguese.