Turim’s Insights

On March 16 and 17, the Monetary Policy Committee (Copom) of the Central Bank (BC) meets to discuss the new level of the Selic rate. During March’s webinar, our team discussed the matter and highlighted the challenges facing the monetary authority before disclosing the new interest rate to the market.

Nelson Abrahao, our strategist, highlighted that the scenario for economic activity, given the worsening of the pandemic and high unemployment rate, is not promising. Added to this, the exchange rate devaluation and the rise in commodities’ prices also tend to weigh on the BC’s decision, which impacts on inflation expectations.

“The big question is about the size of the interest rate hike and the speed at which these increases will occur. This depends on the dynamics between economic activity and inflation”, summarizes Abrahão.