In an interview with CNN this Tuesday (29), the senior economist at LCA Consultores, Thaís Zara, evaluated that, in the best scenario, the proposal sent to the Senate by the elected government could keep the interest rate at 13.75% pa for longer than expected, thus postponing the Selic monetary easing cycle.
“We still have the expectation that the Selic will retreat in the middle of next year. Depending on what is approved, we could have a worsening impact on Brazil’s risk perception, with rising deficits leading to an exploding public debt,” she said.
“This scenario, which we consider adverse and less likely to happen, could lead to the need to restart the Selic hike cycle. For the time being, it is most likely that there will be some type of temporization and that the PEC will be more modest, with lower extract costs, up to R$ 150 billion and valid for 2 years.”
If that is the case, Zara says that the country’s risk perception would not be so deteriorated, “even more so if there is some kind of signal that the fiscal framework will be revised next year”.
“With that, we would not have a sharp deterioration of assets nor the need to raise interest rates, perhaps just keeping them longer and postponing the beginning of the Selic fall cycle a little.”
The economist also commented on what she expects from the design of the new fiscal rule, which may require some type of adjustment in the tax burden.
Check out the full interview in the video above.
Source: CNN Brasil
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