Brazil’s Minister of Labor, Luiz Marinho, says he did not like the decision by the Monetary Policy Committee (Comitê de PolÀtica Monetária) (Copom) to leave the country’s key interest rate (Selic) at 19.75%.
Marinho said that at that level the Selic would delay renewed economic growth.
Marinho admitted that the interest rate was an important component in the fight to control inflation, but he said there were signs that it could be reduced.
“Inflation is a concern and has to be kept under control. That is a government commitment. But I think the situation allows us to begin lowering the interest rate,” he declared.
On Wednesday, July 20, the nine members of the Copom decided unanimously to maintain the government’s annualized benchmark interest rate at 19.75%.
The so-called Selic rate is used as a benchmark for bank loans, and over half of the Brazilian government’s domestic debt is pegged to it.
“After evaluating the prospects for the trend in inflation, the Copom decided, unanimously, to maintain the annualized Selic rate at 19.75%,” the Committee said in a note.
To calculate the Selic, the Copom takes into account various factors, including the outlook for future inflation (the next 30 days) and momentary upward or downward price tendencies in the economy.