Brazil’s Federation of Industries of the State of São Paulo (Fiesp) believes that the 0.25% increase in the government’s baseline interest rate (Selic) will have consequences for the domestic market.
“It is unclear what demand will be in the coming months or the likelihood that one will stay employed or find a job. Such uncertainty could act as a brake on consumption and investment plans,” says the official note issued yesterday by the organization, following the announcement of the Monetary Policy Committee’s (Copom) decision to raise the Selic.
The Fiesp also emphasizes that such sectors as construction, services, and segments of the food industry, such as dairy products and biscuits, which have just started to show signs of recovery, will probably have to revise their expectations downward and postpone investments.
“We all know that sustained growth requires inflation under control. But we are also aware of the need to increase investments, to extend the planning horizons of firms and consumers, and so many other conditions for sustained growth that are being impaired by the rise in interest rates,” says the Fiesp message.
“The only way to reconcile so many goals is a reinforced fiscal policy, to remove the excess weight that is currently overburdening monetary policy.” the note concludes.
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