The Central Bank’s Monetary Policy Committee (Copom) unanimously decided this Wednesday (31) to maintain the Selic rate, the economy’s basic interest rate, at 10.5% per year. 
At the previous meeting, in June, Copom interrupted the cycle of interest rate cuts started almost a year ago. From August last year until March this year, Copom had reduced the basic interest rate by 0.5 percentage points at each meeting. In May, the rate had been cut by 0.25 percentage points.
In a note, Copom explained that the decision was motivated by the adverse external environment and by the set of indicators of economic activity and the domestic labor market that continue to show greater dynamism than expected.
“The Committee unanimously chose to keep the interest rate unchanged, highlighting that the uncertain global scenario and the domestic scenario marked by resilience in activity, rising inflation projections and unanchored expectations demand diligent monitoring and even greater caution,” says the note.
The decision, according to the committee, was aimed at consolidating the disinflation process. “Monetary policy must remain contractionary for a sufficient period of time at a level that consolidates not only the disinflation process but also anchors expectations around the target,” it said.
The Committee says it will remain vigilant and recalls that any future adjustments to the interest rate will be dictated by the firm commitment to converge inflation to the target.
Inflation
The Selic rate is the Central Bank’s main instrument for keeping official inflation, measured by the Broad National Consumer Price Index (IPCA), under control. In June, the IPCA rose 0.21%, below the rate recorded in May (0.46%).
In the year, the IPCA accumulates an increase of 2.48% and in the accumulated total for the last 12 months, the rate is 4.23%, above the 3.93% observed in the previous 12 months.
For 2024, the National Monetary Council (CMN) set inflation target at 3%with a tolerance margin of 1.5 percentage points up or down.
According to the Inflation Report released in June by the Central Bank, inflation is expected to be 4% in 2024. According to the Focus bulletin, a weekly survey of financial institutions released by the BC, official inflation is expected to close the year at 4.1%.
