Brazilian credit lines are based on the value defined by the Selic rate — Special Settlement and Custody System . Selic is the main interest rate in the Brazilian economy.
Periodically defined by the Monetary Policy Committee (Copom) of the Central Bank of Brazil, it is one of the main instruments used to control inflation and regulate economic activity in the country .
To understand what this rate is about, how it works and its implications is essential for businesspeople , investors and consumers who want to make informed and strategic financial decisions, continue reading!
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What is the Selic rate?
The Selic rate is the basic interest rate of the vietnam whatsapp number data economy and is one of the main monetary policy instruments used by the Central Bank of Brazil . It is used in countries, such as Brazil, that use the inflation target regime.
Thus, the rate serves as a reference for other interest rates practiced in the market , directly influencing the country’s economy.
It is named after the Special Settlement and Custody System. Administered by the Central Bank, in which federal government bonds are in financial institutions. In other words, this system considers the government’s need to pay debts or investments.
The Selic is determined by the Central Bank’s Monetary Policy Committee Copom. Hich meets every 45 days to evaluate and adjust the rate as necessary.
Who sets the inflation target?
The inflation target is a goal set by the government, usually through the Central Bank, for the inflation rate over a given period, usually one year.
This objective serves as a guide telecoms: new boss for the german-speaking operator quickline the country’s monetary policy , directing the Central Bank’s actions to keep inflation within limits considered healthy for the economy.
The main objective of the inflation target is to ensure price stability. Price stability is essential for sustainable economic growth by providing a predictable environment for consumers, businesses and investors.
What is the Selic rate for?
After understanding what the Selic rate is, it is important to understand what it is for. In general, it was to regulate the sales price of government bonds and also to combat inflation.
When inflation is high, the Central Bank can increase the Selic rate to make credit more expensive and reduce consumption , which tends to reduce inflationary pressure. After all, when interest rates are high, people buy less, reducing beb directory demand and leading to lower prices.
In addition, the Selic rate also serves as the basis for calculating the interest charged on business loans and financing . When the Selic rate increases, the cost of credit for companies and consumers also increases, making credit more expensive. When the Selic rate decreases, credit becomes more accessible.
Another point that the rate influences is the returns on various investments , especially fixed income investments, such as Treasury Direct bonds, CDBs and savings accounts.
When and how is the Selic rate define?
The Selic rate is the Monetary Policy Committee (Copom) , a body of the Central Bank of Brazil. Copom meets regularly, every 45 days, to assess the country’s economic conditions and decide on the base interest rate .
During these meetings, committee members analyze a series of economic indicators, such as inflation, economic activity, the labor market and the international scenario.