1. COPOM makes 6th consecutive cut to Selic rate; basic interest rate at 10.75%

On Wednesday (20th), the Central Bank’s Monetary Policy Committee (COPOM) reduced the Selic rate by 0.5 percentage points, as indicated in previous statements. As a result, the basic interest rate went from 11.25% per annum to 10.75%. The Committee’s decision was unanimous.

This was the sixth consecutive reduction in the basic interest rate, which began to drop in August 2023 when the Selic rate was at 13.75% per annum. Subsequently, the Committee has been reducing the rate by 0.5 percentage points in every meeting. The financial market expects that the rate will continue dropping in 2024, to end the year at 9% per annum.

Metrópoles: Copom corta Selic pela 6ª vez e taxa vai a 10,75%, a menor em 2 anos
O Globo: Banco Central diminui Selic para 10,75% ao ano e indica redução no ritmo de corte

2. The administration will send tax reform bills to Congress in April

Finance Minister Fernando Haddad said the administration will submit bills regulating the tax reform to Congress in April.

However, Haddad also said that due to the urgency of the matter, the administration will not hold public hearings. The minister also said that once the bill becomes law, there will be a gradual transition process, aiming to avoid problems while the new taxation system comes into effect.

CNN: Haddad garante que projetos que regulamentam reforma tributária serão enviados ao Congresso em abril

3. Financial market expects 1.78% GDP growth in 2024

The majority of financial market operators (58%) believe that this year’s Gross Domestic Product (GDP) growth will be close to the expected 1.78%. Nearly one-third of operators (32%) expect the Brazilian economy to grow more than this. The pessimists, who expect less growth, are in the minority at just 10% of operators.

The data comes from a new round of polls by Genial/Quaest. The study interviewed 101 people with investment funds in Rio de Janeiro and São Paulo. The target of the polls were managers, economists, analysts, and decision makers in the financial market. Very few people believe in Fernando Haddad’s promise to reach zero deficit this year. 99% of the people interviewed believe the target will not be met.

O Globo: Mercado financeiro vê PIB de 2024 em torno de 1,78% e tem crença quase nula em déficit zero

4. Chamber of Deputies approves bill standardizing interest on judicial debts

On Tuesday (19th), the Chamber of Deputies approved a bill standardizing the calculations of interest rates on loans, losses, and delays in contract fulfillment. The bill establishes the so-called “real interest rate,” based on the average profit of National Treasury bonds, which follows inflation.

The calculation will be used whenever there isn’t a specific determination in contracts. The submitted bill also determined the National Monetary Council (CMN) could increase or reduce charges by 0.5% per month.

Exame: Câmara aprova projeto que uniformiza juros de dívidas judiciais

5. Central Bank’s GDP preview indicates economic growth in January

The Central Bank’s Economic Activity Index (IBC-Br) – seen as a preview of the Gross Domestic Product (GDP) – registered a 0.6% increase in January compared to the previous month. The Central Bank shared the data.

The results surprised the financial market, which expected less growth. This was the fifth consecutive month with an increase in economic activity. IBC-Br is calculated following a seasonal adjustment, a “compensation” to compare different periods.

O Globo: ‘Prévia’ do PIB do Banco Central aponta crescimento de 0,6% na economia em janeiro