Market expects Selic to stay at 13.75% per 12 months, survey reveals

41 out of 50 financial institutions believe rate should remain unchanged, but economists recognize residual adjustment risk of 0.25 point

On the 5th, the president of the Central Bank, Roberto Campos Neto, said at an event that the BC Monetary Policy Committee (Copom) would assess a new interest rate tightening. The following day, the autarchy’s Monetary Policy director, Bruno Serra, added that it was “inconsistent” for the market to project inflation above the center of the target in 2024 while discussing the drop in interest rates in 2023. In other words, the message was that the bank I wouldn’t let my guard down. Even so, banks and consultants believe that the cycle of high Selic, the basic interest rate, came to an end at the August meeting.

For 41 of the 50 financial institutions interviewed by the Broadcast projections, the rate should be maintained at 13.75% at the meeting that starts today and ends tomorrow, a move that would end the longest cycle of monetary tightening in history. However, economists acknowledge that it increased the residual adjustment risk by 0.25 point.

For Luís Otávio de Souza Leal, chief economist at Banco Alfa, the scenario is for interest rates to remain at 13.75%, in a decision that must be accompanied by a tough speech on the part of the BC. The economist recognizes that, given the increase in inflation projections for 2024, the Copom may opt for a residual tightening as a way of signaling to the market its commitment to the target.

“The only reason I see the risk of an increase to 14% is to reinforce not only with words, but with actions, this speech. hawkish (inclination towards higher interest rates to contain inflation). In terms of inflation convergence, I don’t see this 0.25 point difference having a relevant impact, but it could be a way to make the market revert this expectation of 2024″, he says.

SPLIT SCENARIO

Economist Silvio Campos Neto, from Tendências Consultoria Integrada, expects the Selic to rise to 14% in September, but recognizes a “divided scenario” at the meeting. “The possibility of ending the cycle at 13.75% is at stake, not least because the signs since the last Copom were not clear”, he says.

The chief economist at Trafalgar Investimentos, Guilherme Loureiro, says that the most likely is the maintenance of the Selic at 13.75%, although he recognizes the risk of a residual increase of 0.25 point. “From a practical point of view, little changes, because we are about to end the cycle”, he says.

Loureiro considers that the reduction of inflation projections for 2022 and 2023 in the Focus bulletin can buy a degree of comfort for the BC. In the same vein, the prospect of improved fiscal conditions in the short term, with a primary surplus this year, would suggest a more relaxed scenario.

The information is from the newspaper. The State of São Paulo.

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