After Campos Neto’s speech, analysts continue to predict maintenance of interest rates

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After the president of the Central Bank (BC), Roberto Campos Neto, stated that he would continue with the idea of ​​converging inflation, analysts told the CNN Brasil Business that maintain the expectation for interest rates to be maintained at 13.75% at the next Copom meeting, even though the speech may have been considered harsher by the market.

Campos Neto said on Monday night (5th) that he would evaluate “a possible final adjustment” in the interest rate path at the next Copom meetings, scheduled for September 20th and 21st. The statement was made at the event “Prêmio Valor 1000”, promoted by Jornal Valor Econômico, in São Paulo, and reflected in the opening of the stock exchange this Tuesday (6), with investors considering a margin for an advance in the Selic at 0, 25 percentage point, going to 14% per year.

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“I do not interpret it as an indicator that a decision will be taken to raise interest rates again. It is part of the BC’s role to be vigilant and say that it will remain vigilant, but a movement that would take the Selic to 14% is not what is expected”, said the chief economist at Órama, Alexandre Espírito Santo.

According to him, the domestic scenario presents important advances in the economy, and an increase of 0.25 percentage point at this moment would not have a relevant impact that would justify the continuation of the escalation.

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“What worries us is the inflation of services, and a possible rise in interest rates will not affect it now. We have to think about the fiscal issue, how we are going to unleash spending next year. So it wouldn’t be a surprise if the Copom granted another interest rate readjustment at the next meeting, but I don’t think that will happen, it’s not worth this stress”, he added.

For André Perfeito, chief economist at Nécton, the expectation of maintaining the Selic at 13.75% per year is understandable as the world is at risk of recession and is in the process of deceleration, but the increase in the basic interest rate would not be surprising given the volatility of the market.

According to data from B3’s Copom Option Contract, the market sees a probability of 81% that the Selic will remain unchanged, against 15% who believe in an increase of 0.25 pp

“The projection is still of maintenance [dos juros]but it wouldn’t be strange if they decided on an increase, because the uncertainty around the economy is great, we are facing an election period, and the greater the uncertainty, the greater the risk”, scored Perfect.

In the opinion of economist José Márcio Camargo, Campos Neto’s speech is more a message to the market not to anticipate the fall in interest rates than an effective warning to follow up with the rise in the basic rate.

At the time, in an event published by Jornal Valor Econômico, the president of the BC said that he “does not think about dropping interest rates at the moment”, although part of the market believes that it would be appropriate to start a retreat.

“We have a downward trend in inflation, but it is still very early on. The fear of Campos Neto and Bruno Serra is that the market will start to expect a drop in interest rates sooner than they would like to do”, said Camargo.

“I believe in maintaining the Selic at 13.75%. There is still a lot of interest left to enter economic activities and, when that happens, the economy will slow down and the impact will hit inflation”, highlighted the economist.

On the other hand, economics professor at Insper Alexandre Chaia stated that he believes that Campos Neto and the Central Bank intend to alert the market that they are concerned about the fiscal issue, the expansionist policies of the two main candidates for the presidency next year, and will act to bring inflation close to the target for 2023 and 2024.

“I believe there will be an increase at the next meeting, but yesterday the alert was more in the educational sense than efficient, a sign that despite elections, the objective is to bring inflation closer to the target in the following years”.

“But 13.75% or 14% at the moment doesn’t change much, what matters is the message that the BC wants to give with this”, said the professor.

For him, the external scenario has worsened since the last Copom communiqué, with more doubts about oil and other commodities, which may be on the Brazilian monetary entity’s radar about its next decisions to fight inflation.

“The next meeting is not aimed at fighting inflation now, but it signals the BC’s position for the first half of next year, which is a complicated period due to a possible new government. Whatever the scenario, it is likely that there will be very intense spending and that will keep the inflation precaution alive”, he pointed out.

Source: CNN Brasil

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