BC is unlikely to end cycle with Selic below 9%, says Berriel

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The basic interest rate of the economy, the Selic, should end the high cycle by at least 9%, projects Tiago Berriel, chief strategist at BTG Pactual Asset Management. He spoke about the prospects for the economy while participating in the MacroDay 2021, BTG Pactual bank event, this Tuesday, 14.

Berriel stated that the Central Bank’s board said it would do “whatever it takes”, that is, whatever was necessary, to control inflation, but without explaining what kind of measures would, in fact, be taken. For the chief strategist, the monetary authority was more specific this Monday, at the bank’s event.

BC president Roberto Campos Neto made it clear, according to Berriel, that the rise in the Selic will follow a pace of 100 basis points. It took the decision, therefore, to “minimize the risk of an excessive cycle, but taking some risk of deteriorating expectations and projections in the short term”.

There are doubts about how the marginal instrument, which is the cycle size, will be used. But taking that direction, it is “very unlikely” that the BC will be able to end the cycle of hikes below 9%, Berriel said. close 2021 at 8.25%, in March, it should be between 9% and 9.5%, according to his estimates.

Berriel also commented that the neutral interest rate has been set at around 3% by the Central Bank, although it is difficult to estimate. “The BC has been extremely transparent regarding the expectation of a neutral interest rate of around 3%,” he said.

“Even if you have any doubts about its neutral level, we would be at a restrictive level close to 9%, 9.5%, even with inflation expectations around 4%,” said Berriel.