The basic interest rate of the economy, Selic, should increase again at a percentage point (PP) in March. This is what the minutes of the Monetary Policy Committee (Copom) meeting released on Tuesday (4). According to Copom, the short -term inflation scenario follows adverse, especially due to the increase in food prices. Keeping this scenario, the committee points out that inflation should be above the goal for the next 6 months.
“Given the continuity of the adverse scenario for the convergence of inflation, the Committee anticipates, in confirming the expected scenario, an adjustment of the same magnitude in the next meeting,” says the Copom.
Last week, the Committee increased to Selic to 13.25% per yearby understanding that the decision is compatible with the strategy of convergence of inflation to the surrounding goal. The minutes pointed out that food prices have raised significantly, according to other factors, the drought observed over the past year and the rise in meat price, also affected by the ox cycle.
Regarding industrialized goods, the recent movement of increased dollar presses prices and margins, suggesting a higher increase in such components in the coming months.
For members of the committee, this increase tends to propagate to the medium term. “This decision [de aumentar a Selic] It is compatible with the Inflation Convergence Strategy around the goal along the relevant horizon. Without prejudice to its fundamental purpose of ensuring price stability, this decision also implies smoothing fluctuations at the level of economic activity and promotion of full employment, “the committee explains in the minutes.
Also according to Copom, service inflation follows above the level compatible with the fulfillment of the goal, according to the latest observations. The minutes points out that, over the last quarters, economic activity has maintained the dynamism, in particular, in the pace of familiar consumption growth.
Another highlighted point is that the labor market was also warm, along with the credit market. This picture escapes the base scenario defended by the Committee for the retreat of inflation. This scenario involves a contractionist economic policy, with slowdown in economic activity.
“It was highlighted, in the short -term analysis, that, in realizing the projections of the reference scenario, the inflation accumulated in 12 months will remain above the upper limit of the goal tolerance interval in the next 6 consecutive months. Thus, with the June inflation this year, it would be confused the goal under the new system of the goals regime, ”said the Copom.
The inflation target regime determines that the index should be 3% accumulated in 12 months, with bands of 1.5 pp up or down. If it is above the band’s limit for more than 6 months in a row, there is non -compliance with the goal.
The BC has again pointed to the dynamism of the economy with vigor in broad credit concessions, expansionist fiscal policy and the promotion of full employment as factors that have supported consumption and aggregate demand, pressing inflation.
Copom said that it will continue to observe these factors for the performance of the “Inflation Convergence Strategy around the goal throughout the relevant horizon”.
“As the labor market is still warm, it is difficult to evaluate to what extent a possible deceleration would reflect the weakening of demand or supply pressures, therefore, with different impacts on inflation. The committee will continue to follow economic activity and reinforces that the cooling of demand Aggregate is an essential element of the process of rebalancing between supply and demand from the economy and convergence of inflation to the goal ”.
Regarding the external scenario, Copom also points out that the scenario also remains challenging, especially the conjuncture and economic policy in the United States. The base scenario of the committee is still of gradual and ordained slowdown in the US economy.
However, the committee draws attention to some uncertainties in economic policy, such as the introduction of import rates, adoption of possible tax stimuli, restrictions on the supply of work, and important changes in relative prices resulting from energy matrix reorientations, “o which can negatively impact financial conditions and capital flows for emerging economies. ”
“The committee carefully followed the exchange rate movements, which has reacted, notably, to domestic tax news, the news of the US economic policy and the interest differential. The achievement of certain policies in the United States can press domestic assets prices, ”says the minutes.
