MercoPress. South Atlantic News Agency

Brazil's productive sectors uneasy with Selic kept at 15%

Brazil's industry, commerce, and trade sectors criticized the measure

Brazil's Central Bank's (BCB) Monetary Policy Committee (Copom) decided on Wednesday to maintain the basic Selic interest rate at 15% per annum, which drew long faces among the country's industry, commerce, and trade sectors.

For the National Confederation of Industry (CNI), high interest rates stifle economic activity and isolate Brazil on the international stage, where most countries have already begun cycles of reduction. In a statement, CNI President Ricardo Alban said that the continuation of an “excessively contractionary” monetary policy is harmful to the country.

“The Selic rate has slowed the economy far beyond what is necessary, since inflation is clearly on a downward trajectory. The current rate brings unnecessary costs, threatening the labor market and the well-being of the population,” Alban said.

An unprecedented CNI survey shows that 80% of industrial companies point to interest rates as the main obstacle to short-term credit, while 71% consider the rate to be the biggest obstacle to long-term financing.

The construction sector also expressed concern. In a statement, the president of the Brazilian Chamber of Construction Industry (CBIC), Renato Correia, said that a high Selic rate over a long period makes real estate credit more expensive and inhibits new projects.

“Construction is one of the sectors most sensitive to the cost of credit and consumer confidence. A Selic rate of 15% makes many projects unfeasible,” he said. In October, the CBIC reduced its growth forecast for the sector in 2025 from 2.3% to 1.3%, citing the impacts of the prolonged cycle of high interest rates.

Trade unions also criticized the decision. According to the National Confederation of Financial Sector Workers (Contraf-CUT), part of the Single Workers' Central (CUT), each percentage point increase in the Selic rate raises public spending on debt interest by around R$50 billion.

“We are talking about almost R$1 trillion diverted to rentierism, which could be invested in health, education, and infrastructure,” said Juvandia Moreira, president of Contraf-CUT and vice president of CUT.

Força Sindical classified the scenario as an “era of extortionate interest rates.” In a statement, the union's president, Miguel Torres, said that the Central Bank's policy compromises consumption and household income at the end of the year.

High interest rates have also attracted criticism from the supermarket sector. According to the São Paulo Supermarket Association (APAS), Brazil is going against the grain of the rest of the world, which is reducing interest rates. “We currently have the second-highest real interest rate in the world, which is hurting investments and household consumption and perpetuating structural barriers to development,” said Chief Economist Felipe Queiroz.

Although it recognizes that interest rates are high, the São Paulo Commercial Association (ACSP) believes that monetary policy responds to other challenges. According to the entity's economist, Ulisses Ruiz de Gamboa, maintaining the Selic rate reflects a scenario of inflation still above the target, despite the slowdown in economic activity and the appreciation of the real. “This situation, coupled with fiscal expansion, labor market resilience, and external uncertainties, justifies a cautious monetary stance,” he explained. (Source: Agencia Brasil)