The Central Bank’s Monetary Policy Committee (Copom) decided to raise the basic interest rate by one percentage point. As a result, the Selic rate goes from 12.25% to 13.25% per year. The justification for the latest increase was inflation. In addition, the Copom foresees another one percentage point increase at the next committee meeting.
During a press conference on Thursday morning, President Lula commented on the interest rate hike. He emphasized the need for patience and expressed confidence that Galípolo would eventually deliver lower interest rates when the policy allows. Lula acknowledged the necessity of the rate hike set by the previous president and supported Galípolo’s actions.
In an interview on Central do Brasil, economist and columnist Paulo Nogueira Batista Jr. agreed that Galípolo’s strategy is the most appropriate for the current situation. Nogueira warned about the negative consequences of high interest rates on the economy and society, urging the Central Bank to consider reducing rates starting in April or May.
Nogueira also highlighted the risks associated with high interest rates, including the concentration of wealth among the rich and the vulnerability of the economy to capital flight. He emphasized the importance of gradually reducing interest rates to prevent pressure on public finances and maintain economic stability.