Central Banking

April 25, 2014


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The Central banking (BC) surprised the market. Opposing the majority of the forecasts, the institution kept the rhythm of relief in the monetary politics and cut the basic interest of the economy (Selic) in 1 porcentual point, for 9,25% to the year. The majority of the forecasts pointed reduction of 0,75 point. With the room followed cut, Brazil starts to have Selic of a digit for the first time since that the tax was servant, in 1986. The next decisions, however, must more be comedidas. In note, the BC said that it will start to act in way ' ' more parcimoniosa' '. Since the 2003 end, at the beginning of the government Squid, the BC did not promote a sequncia of cuts of interests of this magnitude.

E, for the first time since that the current series is measured, the interests in Brazil are below of the two digits. With this, the real interest (nominal tax of interests less the inflation) is between 4% and 5% to the year. It is good for remembering that in 2003, proper president Luiz Incio Lula da Silva arrived to say that the tax of a digit was one ' ' dream of the team econmica' '. At the time, it was in 26%.A decision was not consensual. Of the eight votes, six had been favorable the 1 point and two had opted to 0,75 point. But two directors of the BC, Mrio Mosque (Economic policy) and Mrio Tors (Monetary Politics), both deriving ones of the market, had voted for the low one of only 0,75 point in the Selic defended for the financial system. The maintenance of the rhythm of the cut practised in April was, according to BC, taken ' ' in view of the perspectives for inflao' '. The gesture of ousadia of the BC came, however, folloied of an acknowledgment: daqui for ahead does not have more guarantee of reductions in the Selic.

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