Copom begins meeting this week to determine interest rate (Selic)

The Central Bank’s Monetrary Policy Committee (“Copom”) – Brazil’s equivalent of the Federal Reserve – begins a regular meeting this week. It will take place on Tuesday and Wednesday (April 17 and 18) at which time the committee will evaluate the domestic and external economic situation with a special focus on whether or not there are pressures that could compromise or that threaten its control of prices and inflation. At the end of the meeting, as usual, on Wednesday afternoon, Copom will announce Brazil’s benchmark interest rate, known as the Selic.

At the moment the Selic is 9.75% per year. Most market analysts believe Copom will stabilize the Selic at around 9% for the rest of the year. But is not clear if there will be a rapid or a gradual reduction at this time.

Lowering the rate now would be a sign that Copom believes the Brazilian economy has absorbed and is dealing adequately with the effects of the international financial crisis. It would also be an effort on the part of Copom to give the Brazilian economy a boost after sluggish 2.7% GDP growth last year.