In the minutes of its 249th Meeting, held last Wednesday (21), the Central Bank Monetary Policy Committee (Copom) justified the maintenance of the Selic rate at 13.75%.

According to the Copom minutes released by the Central Bank on Tuesday (27), the decision is compatible with the strategy of converging inflation to near the target in 2023 and (to a lesser extent) 2024.

“Without prejudice to its fundamental objective of ensuring price stability, this decision also implies the smoothing of fluctuations in the level of economic activity and the promotion of full employment,” the minutes state.

Copom also pledges to remain vigilant, evaluating whether the strategy of “maintaining the basic interest rate for a sufficiently prolonged period” will be able to ensure the convergence of inflation. And it states that it will not hesitate to raise interest rates again, if necessary. For EQI Asset, the Selic should remain at 13.75% until at least June next year.

External and internal scenarios

According to Coopm, the external environment remains “adverse and volatile”, with continuous negative revisions to the growth of the main economies, especially China – which directly impacts Brazil due to the reduced demand for commodities.

“The data released since the last Copom meeting reinforce the view that the American labor market, as well as that of other advanced economies, remains heated. However, the reversal of counter-cyclical policies in the main economies, the continuity of the war in Ukraine, with its consequences on the supply of natural gas to Europe, and the maintenance of the policy to combat Covid-19 in China reinforce a perspective of deceleration of global growth in the coming quarters.

Copom stresses concern especially with services inflation in developed countries.

“We observe an incipient normalization in supply chains and an accommodation in major commodity prices in the recent period, which should lead to a moderation in global goods-related inflationary pressures. On the other hand, the low degree of labor market idleness in these economies suggests that inflationary pressures in the services sector may take time to dissipate,” he says.

In the domestic environment, the committee highlights a Gross Domestic Product (GDP) with growth above expectations in the second quarter and a labor market with positively relevant data.