ECONOMY | As expected, BCB lifts the Selic. On 18 April Brazil’s central bank (BCB)’s monetary policy committee (Copom) voted 6-2 to increase the benchmark Selic interest rate by 25 basis points to 7.5%, without bias, citing the need to address the “high level of inflation” and the “resilience” of inflation. However, the bank tempered this by saying that internal and, principally, “external uncertainties” required that “monetary policy be managed with caution”. Given the still-fragile internal and external scenarios, most analysts expect the Copom to lift the Selic by 150 basis points at most, in incremental stages over the next few months. In the latest (15 April) BCB poll of private economists, the consensus on the year-end Selic rate was steady at 8.5% both this year and next, with real GDP growth of 3.0% and inflation of 5.7% in 2013, and growth of 3.5% and the same inflation in 2014. Politically the government led by President Dilma Rousseff may prefer to see the Selic increase now rather than closer to the 2014 general election, allowing inflation to stabilise and consumer sentiment to remain steady. The government is running a looser fiscal policy in support of growth (and re-election), which in the long term is supportive of inflation. Alexandre Tombini, the BCB president, was among the six committee members that voted for the increase.
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