Reduction in interest rates could mean the resumption of economic growth

This week’s meeting of the Monetary Policy Committee (COPOM) could mark the first step towards a resumption of growth.

At first, it is certain that the mood has improved. From almost everywhere came praise for the COPOM’s decision to step up the rate of cut in the basic interest rate. After dropping half a point, in two steps of 0.25 point each, over the last three months of 2016, the SELIC was relieved by another 0.75 point now, passed to 13% per year, without bias, the lowest rate In 20 months.

The expectation is that it will fall more in the coming months, reaching a digit at the end of the year and paving the way for economic recovery.

The new framework has fueled the expectation that further cuts in the basic interest rate will come in the coming months, at least equal in magnitude to this week, or possibly higher, by 1 point. The first move has already led major banks to announce a reduction in the cost of some credit lines, which is good news for the debtors, families and companies. Good humor can turn into confidence for the resumption of activity and investment. However, it is necessary to proceed with the process of adjustment of the economy, which is another factor taken into account by COPOM itself and is the basic foundation of the path of recovery.