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The National Confederation of Industry welcomes the Copom's decision to reduce the basic interest rate, envisioning a more optimistic scenario for credit and the economy.
The decision of the Monetary Policy Committee (Copom), of the Central Bank, to cut the basic interest rate (Selic) by 0,50 percentage points, it was applauded by the National Confederation of Industry (CNI). According to the entity, the measure is timely and benefits the credit market and economic activity as a whole.
A Breath of Fresh Air in the Credit Market
According to the president of the CNI, Robson Braga de Andrade, this reduction in the Selic comes at a critical moment. “The credit market for companies saw a contraction of 5% in the first seven months of this year compared to the same period of the previous year”, points out Andrade. He believes that this measure will help reverse the decline in credit granting and give new impetus to economic activity.
Economic Slowdown: A Worrying Background
The Gross Domestic Product (GDP) also showed signs of slowing down in the first two quarters of 2023, growing just 0,9% and 0,6%, respectively. Furthermore, there was a notable decline in industrial production of capital goods and consumer goods in July 2023 compared to the same month in the previous year. These statistics cast doubt on the future pace of economic activity. “The reduction in Selic is crucial. It not only helps combat inflation, but also avoids greater restrictions on the industrial sector”, says the president of the CNI.
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The Selic Reduction and Inflation Under Control
Since February 2022, Brazilian monetary policy has been strict enough to control inflation. Consumer price indices, which were a major concern in recent years, are now showing a downward trend. For example, the IPCA was at 5,77% at the beginning of the year and slowed to 4,16% in August.
Inflation Expectations and Real Interest Interest
The Central Bank's Focus report also reveals an optimistic outlook for the coming years. The forecast inflation for 2024 is 3,86% and for 2025 it is 3,50%. Even after the recent reduction in the Selic, the real interest rate remains at 8,8% per year, which suggests that there is still room for future Selic cuts without negatively affecting inflation or economic activity.
In summary, the Selic reduction is a wise move that should benefit both the credit market as economic activity in general. It is a positive step to mitigate the economy's current challenges, maintaining a cautious balance with the inflation scenario.
Source: Journalism – CNI.
