Brazil’s Central Bank New 19.25% Interest Rates Draw Unions’ Ire

Brazil’s Central Bank’s Monetary Policy Committee (Copom) decided, yesterday (16), to raise the annualized benchmark interest rate, the Selic, from 18.75% to 19.25%. The 0.5% increase corresponded to what financial analysts and institutions were expecting. The Copom decision was unanimous.

Last year the Selic remained stable for various months. In September, the Central Bank resolved to begin raising the rate, the rationale being the need to rein in the inflationary process. Successive hikes since then have elevated annualized interest rates by 2.75%.

Brazil’s two major workers’ unions were prompt to lament the decision to raise the Selic.

The national president of the Central Workers’ Union (CUT), Luiz Marinho, issued a note pointing out that the increase “only serves to reinforce the need for the democratization of the financial system’s highest deliberative organ, the National Monetary Council (CMN).”

The CUT, business associations, and academic figures launched a campaign to expand the Council, which is currently composed of three members: the president of the Central Bank, the Minister of Finance, and the Minister of Planning.

The president of the Union Force, Paulo Pereira da Silva (known as “Paulinho”), underscored in a note that “workers can no longer endure being punished by stratospheric interest rates, which are detrimental to the productive sector and the generation of new job posts.”

Translation: David Silberstein
Agência Brasil