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On Wednesday (03/08), the Central Bank Monetary Policy Committee (Copom) decided, unanimously, to raise the Selic – the country’s basic interest rate – from 13.25% per year to 13.75% per year. This is the 12th consecutive interest rate increase. As a result, the Selic reached the highest level since November 2016, when it was at 14% per year. That is, in almost six years.
Projections
In the report released by the Copom on Wednesday (03/08), the committee said that it will assess the need for a smaller readjustment at the next meeting. Financial market analysts project that, from now on, the Selic should remain at the current level of 13.75% until May 2023 – when it will begin to fall, if the scenarios are confirmed. The forecast is that the rate ends next year at 10.5% per year.
Current Scenario
For the Copom, the scenario still presents high consumer inflation and an adverse and volatile external environment. The main risk factors for the persistence of inflation are: greater persistence of global inflationary pressures, and “uncertainty” on the part of investors regarding the Brazilian Government’s compliance with the country’s fiscal rules. Authorities have several times breached the country’s spending limit to implement and boost social projects, particularly during the pandemic and near the elections.
Impact on a Weakened Society
Lately, newspapers have reported cases of markets selling whey instead of milk, beans below the standard, leftovers of cold cuts, carcasses, and chicken skin. In addition, many scenes of people looking for food inside garbage trucks have been spotted. These situations reveal some of the consequences of the rising inflation that followed two consecutive years of economic crisis caused by the pandemic. A great part of the population is facing difficulties to buy food. At the end of 2020, 19.1 million people were living with hunger in the country. In 2022, there are 33.1 million people without regular access to food, as shown by the updated data from the National Survey on Food Insecurity, developed by the Brazilian Research Network on Food Sovereignty and Security (Rede PENSSAN).
