The Copom (Monetary Policy Committee) increased the basic interest rate, the Selic, by 1.5 percentage points, jumping from 6.25% to 7.75%. It is the highest rate in 4 years. The main purpose of the increase is to try to control inflation.
It was the sixth consecutive increase in the year. At the penultimate Copom meeting, which took place in September, the expectation was not to increase the rate by more than one percentage point, but it was not possible to complete the objective. In September, the rate increased from 5.25% to 6.25%.
The Selic, or basic interest rate, is used by public and private banks to calculate interest rates. One of the purposes of the rate is to regulate inflation. The Copom operates with the Selic rate according to the country’s economic expectations and to how the government can work to reach a financial balance.
Written by Marcos Ferreira, Content Assistant at Drummond Advisors