The Central Bank raised the Selic rate by 1 percentage point and raised interest rates to 13.25% a year. In the announcement of the decision, Copom indicated that a new increase of the same magnitude may occur at the next meeting.
The increase in Selic is part of the Central Bank's strategy to control inflation, which is still above the target. However, higher interest rates also make credit more expensive, which hinders financing, reduces consumption, and may further slow economic growth.
With the sign of a new increase, the market already projects that Selic could reach 14.25% at the next meeting. The decision reinforces the Central Bank's stricter stance in the fight against inflation, which should impact companies, consumers, and investors in the coming months.
Interest rates in the USA: The Fed decided to keep interest rates between 4.25% and 4.50% at the first meeting of 2025 and interrupted the cycle of cuts that began in September of the previous year. The decision was already widely expected by the market, especially after signs that the U.S. economy remained resilient, with solid growth and unemployment still low.
ECB meeting: Following the Copom and FOMC meetings, it is the turn of the European Central Bank (ECB) to decide the next interest rate, at 10:15am. In the midst of a weak economy in the bloc, which shows no signs of recovery, a cut of 0.25 p.p., is expected to bring interest rates in the euro zone from 3% to 2.75%.
Source: Awakening — exam from 30/01/2025
