At its first meeting under Gabriel Galípolo’s leadership, Brazilian Central Bank raised the Selic rate by 1 percentage point to 13.25% per year, as widely expected by the market.
Our partner and chief economist, Luis Otavio Leal, was invited by Estadão to analyze the current economic landscape.
It is widely agreed that without a more effective fiscal adjustment, the Brazilian Central Bank will struggle to bring down inflation expectations.
One of the key topics in this debate is the coordination between monetary and fiscal policy. In an ideal scenario, this balance would help smooth economic cycles—during recessions, the government would implement fiscal stimulus (tax cuts and increased spending), while the Brazilian Central Bank would lower interest rates to support economic activity.
Click here to read our economist’s full analysis