The Monetary Policy Committee (Copom) of the Brazilian Central Bank reduced from 6.5% to 6% per year the basic interest rate, the Selic rate. The cut aims to increase the possibility of further economic growth in Brazil.
According to bank XP, the ruling shows that the central bank has taken a more "dovish" stance, that is, more lenient about inflation.
For professor Paulo Feldmann, from USP's School of Economics, Administration, and Accounting (FEA), “average income has fallen a lot, 1.3% a year ago. If we consider that in this period there was inflation around 5%, the fall in average income is even greater, around 6%. That is, people have less income to consume.”
Feldmann believes that reducing to Selic is not enough. For him, "the Brazilian Central Bank should act by forcing a reduction in interest rates for loans to both individuals and companies. It is very illusory to think that now that Selic has fallen to 6% Brazil will grow."
