🇧🇷 Luiz Inácio Lula da Silva
Brazil Interest Rate Cap Idea Wins Some Lula Allies
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Economists and some politicians debate a proposal to cap Brazil's interest rate, known as the Selic, amid a divided reaction from Lula's government.
What happened
The economist André Lara Resende proposes cutting the Selic to about 7.5% within a year, then toward a 3% to 5.5% band. Some Workers' Party figures, including Gleisi Hoffmann, back the article, while Finance Minister Dario Durigan denies any cap is being studied. The Selic is currently at 13.75%, after five quarter-point cuts this year.
Why it matters
The proposal could impact bond returns and the value of US-listed Brazilian shares, which may be influenced by the central bank's decision on Wednesday.
Key facts
- The Selic is currently 13.75%
- Finance Minister Dario Durigan denies any cap is being studied
- Politicians from Lula's Workers' Party back the proposal
- A new council would coordinate fiscal and monetary targets.
Topics
Publisher evidence used
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