Brazlilian Slovak Chamber of Commerce

M A C R O E C O N O M I C
C O M P A S S
210TH MEETING OF THE MONETARY POLICY
COMMITTEE (COPOM)
On October 25, 2017, the Monetary Policy Committee (Copom) of the
Central Bank of Brazil (BC) decided to reduce the Selic rate from 8.25% to
7.50% per year. The decision was unanimous and represented the ninth
consecutive reduction of the basic interest rate of the Brazilian economy.
The set of indicators of economic activity shown signs compatible with the
gradual recovery of the Brazilian economy. The economy continued to
operate with a high level of idle capacity, but the external scenario has
been favorable, as global economic activity has been recovering without
putting too much pressure on financial conditions in the advanced
economies. This has contributed to maintaining risk appetite in relation to
emerging economies.
The behavior of inflation remained favorable. The inflation expectations
calculated by the Focus survey fell to around 3.1% for 2017 and 4.0% for
2018. Projections for 2019 and 2020 remained around 4.25% and 4.0% ,
respectively. For the trajectory of administered prices, which compose the
conditional projections for inflation produced by the Copom, a variation of
7.9% in 2017, 5.1% in 2018 and 4.3% in 2019 was projected.
The scenario with trajectories for the interest and exchange rates
extracted from the Focus survey assumed, among other hypotheses,
exchange rates of R$ 3.16 / US$, R$ 3.30 / US$ and R$ 3.33 / US$ at the end
of 2017, 2018 and 2019, respectively, and interest rates of 7.00% at the
end of 2017 and 2018, rising to 8.00% at 2019.
Under these assumptions, Copom's inflation projections remained around
3.3% for 2017 and fell to approximately 4.3% for 2018. Projections for
2019 were around 4.2% .