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Central Bank decision could affect savings
This week promises to shake up the Brazilian financial scene. The Central Bank is about to make a crucial decision this Wednesday (18), which could directly impact those who make investment deposits in savings accounts.. The famous “Super Wednesday” of 2024 is in the spotlight, and expectations surrounding the definition of the Selic – the basic interest rate – are higher than ever.
If there is one word that defines the climate in the financial market this week, it's tension. And it's no wonder. This Wednesday, the Central Bank will announce whether the Selic rate will be maintained at 10,5% per year or whether it will be raised. The impact of this decision will be felt in several types of investments, including savings, which for some time has not been considered the most profitable investment for Brazilians.
The 2024 “Super Wednesday” and the future of Selic
Just like the United States, Brazil is also experiencing its Super Wednesday, when the Central Bank holds meetings to set interest rates. In Brazil, the Selic is the main instrument of monetary policy, and any change can have significant effects on the economy. According to analysts at Itaú Unibanco, a new cycle of interest rate hikes may be on the way, with projections that the Selic rate will reach 12% per year by January 2025. If this is confirmed, savings, which already suffer from low returns, could become even less attractive.
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Why does the Central Bank's decision matter for those who invest in savings?
The Selic rate does not only affect large investors. For those who make savings deposits, a possible increase in interest rates by the Central Bank could represent a new challenge. Since 2012, savings profitability has been tied to the Selic rate. When the basic interest rate is above 8,5% per year, as is currently the case, savings profitability drops to 0,5% per month plus the Reference Rate (TR), which is currently around 0%. This means that, even with a high Selic rate, the return on savings does not keep up with other fixed income investments..
Other investment options besides savings
With the Selic rate on the rise, more attentive investors are looking for alternatives to savings. Products such as Bank Deposit Certificates (CDB) and National Treasury bonds offer more interesting returns in high interest rate scenarios. However, it is important to highlight that, despite the modest return, savings still have the advantage of not charging administrative fees or taxes, in addition to being guaranteed by the Credit Guarantee Fund (FGC).
Stay tuned for the Central Bank's decision
For those who are used to making investment deposits in savings, this Wednesday could mark a new phase. The Central Bank's decision on the Selic rate can directly influence the returns on this investment and other fixed income investments.. Therefore, it is worth closely monitoring developments and, who knows, considering new investment options for the future.
And you, do you think savings are still worth it or are you already thinking about switching to another type of investment? Leave your opinion in the comments!
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