Brazil’s Central Bank is set to raise the Selic rate to 14.25% on March 19, reflecting a tightening cycle to combat resurgent inflation. Economic analysts anticipate a gradual decrease in the pace of hikes and predict the Selic may peak at 15.25% later this year. Mixed economic signals contribute to uncertainties regarding future rate adjustments and responses to external pressures.
The Central Bank of Brazil is anticipated to increase its benchmark interest rate to 14.25% on March 19, marking the highest level in nearly a decade, as per a recent Reuters poll. This adjustment, expected to be a 100 basis-point hike by the monetary policy committee known as Copom, signifies the third consecutive augmentation of this magnitude in the current tightening cycle.
Under the leadership of newly appointed governor Gabriel Galipolo, the Banco Central do Brasil (BCB) has sustained a firm approach against rising inflation, which reached 5.06% last month. Despite this, upcoming communications regarding policy directions are likely to be vague due to mixed economic indicators.
The Copom meeting is set to implement the Selic rate rise, as confirmed by all 37 economists surveyed from March 10-13. Analysts anticipate a slower rate adjustment pace following the March meeting, with some suggesting that future policy shifts may be moderated due to ongoing economic challenges.
Furthermore, responses gathered indicated a consensus among economic analysts regarding further rate increases in May, following Copom’s decision and recess in April. While most expect a continued hike, a minority forecast potential cuts later this year.
Predictions show that the Selic rate could peak at 15.25% in the third quarter, then begin to decrease, ending 2025 at 15.00% and 2026 at 12.50%. Economists remain uncertain about the implications of external factors, notably U.S. tariff policies that add complexity to Brazil’s economic landscape.
In summary, Brazil’s Central Bank is expected to raise the Selic rate significantly as part of its ongoing strategy to counter inflation. While there is anticipation of a firm stance on interest rates, future communication may lack clarity. The outlook suggests continued adjustments in the coming months, with consensus among analysts supporting further increases. Furthermore, external economic pressures continue to present challenges while requiring careful management.
Original Source: money.usnews.com
