Brasília, February 19, 2004 (Agência Brasil - ABr) - After meeting for nearly three hours, the Central Bank's Monetary Policy Committee (Copom) decided unanimously, and for the second straight time this year, to maintain the prime interest rate (Selic) at 16.5% per year, without bias. This means that the rate will remain unchanged for the next 30 days.
This time the Copom chose just to announce the rate, without any additional observations on the reasons for the decision. The Bank's justification will be spelled out in the Copom's minutes, which should be released next Thursday (26).
After analyzing the country's macroeconomic indicators, especially the data on inflation, the president of the Bank, Henrique Meirelles, and the other eight Bank directors who form the committee decided not to tamper with the Selic.
The decision did not surprise the financial market. Most analysts already expected the Selic to be maintained, after the Copom decided last month to interrupt the succession of interest rate cuts. Between May and December, 2003, the Selic was reduced from an annual rate of 26.5% to 16.5%, a cumulative decline of 10% last year alone.
Even though it was expected by the majority of economists, the result did not please the productive sector. The National Industrial Confederation (CNI), for example, regarded the maintenance of the Selic at 16.5% as "frustrating." According to CNI president Armando Monteiro Neto, the decision "acts in a negative way on the expectations of economic actors, and this will affect investment decisions."
For Monteiro Neto, the Central Bank overestimated the seasonal and temporary inflationary pressures that occurred at the beginning of the year. According to the CNI, the Brazilian economy has been presenting a picture of improvement - a fall in the Brazil risk premium, an exchange rate with the dollar under R$ 3.00, and expectations that inflation will be under control for the next 12 months. Moreover, the international scenario is "very positive" at the moment, which would justify an interest rate reduction. (DAS)
