Banco Bradesco revised its forecast for Brazil's basic interest rate, Selic. Now the bank's expectation is that Selic will close 2019 at 4.75% and remain at this level until the end of 2020. The previous forecast was that interest would be at 5%.
For Bradesco, the Monetary Policy Committee (Copom) of the Brazilian Central Bank should promote two further cuts of 0.50 percentage points in the September and October meetings. Afterward, Bradesco believes that the Copom will reduce 0.25 percentage points in the December meeting. That would lead to 4.75% the rate that currently stands at 6%.
This bet by Bradesco increases the pressure on the Copom and the Brazilian Central Bank, as it adds to the criticism that many economists are making against the current government's economic policy.
For economist Laura Carvalho, for example, the Copom "amid high unemployment, economic stagnation, rising wage inequalities, and below-target inflation expectations, waited" until the end of July 2019 to reduce unemployment. Selic rate by 0.5 percentage point to 6% per annum.
So far, the fall of Selic and the approval of the Social Security Reform have not been enough to leverage the Brazilian GDP. Jair Bolsonaro's government has so far presented no plans to reactivate the Brazilian economy. This, coupled with the absurd statements of both the president and ministers of his government, make the future scenario of the Brazilian economy even more uncertain.
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