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Silicon Valley bank collapse fuels high-interest debate

The tightening of financial conditions caused by high interest rates in the United States was one of the reasons for the collapse of Silicon Valley Bank (SVB) and Signature Bank.

Other reasons are being analyzed, such as the regulation of the financial system, but interest rates will not escape being blamed for the damage already accounted for — and that is yet to come — in the US economy.

In Brazil, the debate about the level of interest grows with the crisis abroad. The president of the Central Bank (BC), Roberto Campos Neto, will go to the Senate in early April to report on the current level of the Selic rate, but, before that, he will have to announce the monetary policy decision of the next meeting, already in next Wednesday.

March 22 also marks the meeting of the Federal Reserve (Fed, the US central bank) on US interest rates, giving Wednesday an already known nickname: “Super Wednesday”.

There, the bet on a new high of 0.25 pp is the majority. Here, the Selic should not change, but the Monetary Policy Committee (Copom) may prepare the ground for a drop in the rate in the coming months.

Communication is a Copom tool and can give more weight to the external risk while awaiting the announcement of the new fiscal framework, which may come out even before the meeting on the 22nd.

The BC’s decision is always to be cautious about the unfolding of events that it does not control, their outcomes and the interpretation of economic agents. Some moments impose more risk. Now, the worst of them might be doing nothing.

In this Wednesday’s episode (15), the CNN Money delves into the latest developments in the collapse of US banks, in addition to the crisis in the Brazilian credit market.

Presented by Thais Heredia, the CNN Money it presents a balance of the news subjects that influence markets, finances and the direction of society and the dynamics of power in Brazil and in the world.

*Posted by Tamara Nassif

Source: CNN Brasil

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