Selic hike should put pressure on debt and GDP, economists say

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The contradictory signs on the part of the federal government in facing the covid-19 pandemic and the lack of a clear commitment to the maintenance of the policy of control of public expenditures left the central bank without many outlets, in addition to starting a new cycle of increasing the Selic, according to an evaluation by economists surveyed by Estadão.

According to them, the increase of 0.75 percentage points, taking the basic interest rate to 2.75% per year, would demonstrate the lack of alternative for the Central Bank, which needed to act quickly to control inflation expectations. The increase, however, should have a negative effect on the cost of public debt and may further depress economic activity, aggravating unemployment – at a time when the country is setting death records and the covid-19 pandemic is still out control.