Brazil: Selic cut for fourth time in a row

Brazil: Selic cut for fourth time in a row

Brazil’s Central Bank (BCB) cut the Selic benchmark rate for the fourth consecutive time, from 12.25% to 11.75% per annum, in line with market expectations, it was reported in Brasilia. The Selic is now at its lowest level since reaching 10.75% in March 2022.

A slower-than-expected process of inflation reduction and a challenging global scenario call for serenity and moderation, the South American country’s Monetary Policy Committee (Copom) said in a statement released after this week’s meeting.

“The Committee reaffirms the need to maintain a contractionary monetary policy until not only the disinflation process is consolidated, but also the anchoring of expectations around its objectives,” it said.

The members of the Committee were unanimous in foreseeing a similar reduction for the Jan. 30-31 next Copom meeting considering that “this is the appropriate pace to maintain the contractionary monetary policy necessary for the disinflationary process.”

In this scenario, Brazilian President Luiz Inácio Lula da Silva on Wednesday enacted a bill to tax investments by the so-called super-rich in personalized funds and offshore companies. The government expects to raise about US$ 6 billion by 2025.

The new legislation was passed after tough negotiations with the center-right coalition, known as “Centrao”.

According to Economy Minister Fernando Haddad, the tax on the super-rich will offset the increase in the non-taxable minimum income tax promised by Lula.