Selic rate increases again, this time from 4.25% to 5.25% per year

The Monetary Policy Committee (Copom) announced a 1% increase in the Selic rate, with a jump from 4.25 to 5.25 percentage points. According to Copom, the financial market is projecting that the rate could reach 7.50% in December and stabilize in 2022.

The Central Bank uses the basic interest rate, the Selic, to reach inflation goals. In this case, the increase was applied in order to make credit more expensive and encourage savings.

Inflation instability is one of the main factors for the increase in the interest rate. The next Copom meeting will take place in September, where another rate hike is expected. This time, the rate is expected to jump to 6.25% per year.

In June, the rate increased by 0.75%, when it jumped from 3.5 to 4.25 percentage points.  It is important to remember that the rate has grown gradually since the beginning of the year, when it closed at 2.75% in March, and in May it went to 3.5% per year.

Written by Marcos Ferreira, content assistant at Drummond Advisors

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