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𝗪𝗼𝗿 𝗳𝗼𝘂𝗿 𝗳𝗼𝘂𝗿 𝗳𝗼𝘂𝗿 𝗕𝗲𝗿 𝗗𝗮𝘆: 𝗣𝗔𝗣𝗘𝗟, 𝗜𝗠𝗣𝗔𝗖𝗧𝗢𝗦 𝗘𝗣𝗘𝗦𝗣𝗘𝗖𝗧𝗜𝗩𝗔𝗦

The basic interest rate, known as Selic (Special Settlement and Custody System), is the main instrument used by the Central Bank of Brazil to regulate the country's monetary policy. Established by the Monetary Policy Committee (Copom), Selic plays a central role in the economy, influencing not only the cost of credit and inflation, but also investments, exchange rates and market behavior.

𝗩𝗼𝗿 𝗩𝗼𝗿 𝗩𝗼𝗿?

The Selic rate represents the cost of very short-term loans between banks, and its value is a reference for several other interest rates practiced in the market. When the Central Bank sets the Selic rate, it is essentially determining the amount that banks pay to lend money to each other. This rate serves as a parameter for the entire financial system, affecting loans, financing and even the yield on financial investments.

𝗙𝗮𝗻𝗰𝗲 𝗳𝗼𝘂𝗿 𝗗𝗮𝗹𝗹 𝗳𝗼𝘂𝗿 𝗗𝗮𝗹𝗹 𝗳𝗼𝘂𝗿 𝗗𝗮𝗹𝗹𝗹

The main function of the Selic rate is to control inflation. In periods of high inflation, the Central Bank tends to increase the interest rate to discourage consumption and reduce pressure on prices. This occurs because, with higher interest rates, credit becomes more expensive, and people and companies consume and invest less, which helps to balance demand and prices.

On the other hand, when the economy is stagnant or in recession, the Central Bank may reduce the Selic rate to stimulate economic growth. With lower interest rates, credit becomes more accessible, encouraging consumption and investment by families and companies. The reduction in the Selic rate also makes it more attractive for investors to invest their resources in productive activities, since the return on investments in government bonds, which follow the Selic rate, decreases.

𝗜𝗠𝗣𝗔𝗖𝗧𝗢𝗦 𝗡𝗢 𝗠𝗘𝗥𝗖𝗔𝗗𝗢 𝗗𝗘𝗖𝗥𝗘𝗗𝗜𝗧𝗢 𝗘𝗜𝗡𝗩𝗘𝗦𝗧𝗜𝗠𝗘𝗡𝗧𝗢𝗦

One of the most immediate effects of the Selic rate is on the credit market. When interest rates rise, the cost of borrowing increases, directly impacting vehicle and property financing and even personal credit. For companies, the impact is similar: the cost of borrowing money to invest in new projects or expand production also increases.

Furthermore, the Selic rate directly influences the return on investments linked to the interest rate, such as Treasury Direct bonds (Tesouro Selic) and Bank Deposit Certificates (CDBs). In periods of high Selic rates, these investments become more attractive to investors, as they offer higher returns. On the other hand, in periods of low Selic rates, the return on these investments decreases, which may lead investors to seek other more profitable options, such as stocks or real estate.

𝗪𝗼𝗿𝗲 𝗳𝗼𝘂𝗿 ...

Another significant impact of the Selic rate occurs in the foreign exchange market. When the interest rate is high, Brazil becomes more attractive to foreign investors, who seek higher returns on their investments. This generates a greater inflow of dollars into the country, which tends to increase the value of the real. Likewise, when the Selic rate falls, the flow of foreign capital may decrease, leading to a devaluation of the Brazilian currency.

This relationship between Selic and exchange rates has direct implications for foreign trade, since a stronger currency makes Brazilian exports more expensive, while a weaker currency can stimulate foreign sales.

𝗗𝗜𝗡𝗲 𝗗𝗮𝗹 ...

The Selic rate is a vital tool in the fight against inflation, which is one of the main concerns of monetary authorities. Inflation occurs when there is a generalized increase in the prices of goods and services, eroding the population's purchasing power. When the Central Bank realizes that inflation is above the target, the strategy is to raise the Selic rate to control demand and, consequently, curb price increases.

However, there is a cost associated with this policy. Raising the Selic rate could slow economic growth and increase unemployment, since more expensive credit discourages consumption and productive investment. Therefore, the Central Bank needs to carefully balance its decisions so as not to excessively harm economic growth while trying to keep inflation under control.

𝗣𝗘𝗥𝗦𝗣𝗘𝗖𝗧𝗜𝗩𝗔𝗦 𝗣𝗔𝗥𝗔 𝗢𝗙𝗨𝗧𝗨𝗥𝗢

In 2024, the Selic rate will remain the focus of attention for investors, companies and ordinary citizens, amid a scenario of global and domestic economic uncertainty. Decisions on the Selic rate depend on a series of factors, such as inflation behavior, GDP growth, fiscal balance and the international context.

For example, a slowdown in the global economy could lead to a reduction in growth expectations for Brazil, putting pressure on the Central Bank to lower the Selic rate to stimulate the economy. On the other hand, persistent inflation, even in a scenario of slow economic growth, could force interest rates to be maintained high for longer.

𝗖𝗢𝗡𝗦𝗜𝗗𝗘𝗥𝗔𝗕𝗘𝗦 𝗙𝗜𝗡𝗔𝗜𝗦

The Selic rate is a powerful tool that influences several dimensions of the Brazilian economy. Its importance goes beyond combating inflation, directly affecting the cost of credit, investment behavior and the foreign exchange market. For investors and companies, being aware of Selic movements is essential for making strategic decisions. Meanwhile, for the general population, Selic variations have a direct impact on daily life, reflecting on the cost of living, access to credit and the return on financial investments.

Thus, the Selic rate will continue to be a central indicator in economic analyses and a critical variable for the trajectory of the Brazilian economy in the coming years.

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