Entities and federations expressed their views on the decision of the Central Bank’s Monetary Policy Committee (Copom) to adjust the basic interest rate (Selic) by one percentage point, from 11.75% to 12.75% per year.
The National Confederation of Industry (CNI) considered the decision to be “wrong”. For the confederation, the previous rate was enough to guarantee a downward trajectory for inflation in the coming months, arguing that the rise takes time to restrict activity and, consequently, hold the rise in prices.
“This new interest rate increase should further compromise economic activity, which is already showing clear signs of weakness. For the industry, the intensification of the monetary policy tightening pace worsens expectations for economic growth in 2022, with adverse effects on production, consumption and employment”, said CNI president Robson Braga de Andrade, in a note. disclosed by the entity.
Also according to the CNI’s assessment, the expectation of falling inflation and the uncertain trajectory of recovery of economic activity demand a more moderate monetary policy and attentive to the challenges of Brazil’s growth in the short term.
The Federation of Industries of Rio de Janeiro (Firjan) considers that, although expected, the tenth consecutive increase in the Selic rate is “inefficient and ineffective in controlling the price level at this time”.
According to the entity, economic activity has already felt the effects of the beginning of the cycle of high interest rates, however inflation has not shown signs of slowing down. “The disorganization of production chains, caused by the covid-19 pandemic, and the impacts derived from the war in Ukraine reinforce that inflation comes from external and temporary supply shocks, not demand. The new interest rate hike further penalizes the level of activity and reinforces the prospect of an economic slowdown in 2022”, evaluated Firjan.
The federation also said that “in this context, it is worth mentioning that the bottlenecks in the input chain showed the need to diversify suppliers and strengthen strategic industries, bringing the urgency of long-term policies to the industry. In addition, the uncertainties related to the fiscal framework keep the perception of risk in public accounts high, which continue to be a risk factor for the Brazilian economy”.
Also in a note, Firjan reaffirmed the need for reforms that signal balance in public accounts, and classified the measure as “impervious” for the resumption of sustainable growth.
