The Selic rate is a basic interest rate in the economy that impacts consumers. Despite this, many people do not know how important it is and do not understand how this rate works in practice.
So, see below what the Selic rate is and understand once and for all how it works in Brazil.
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How important is Selic?
It is important to highlight that the Selic rate represents the basic interest rates of the country's economy. In other words, any movement in this index influences the interest rates. fees practiced in Brazil. The rate is a central point of the monetary policy strategy in Brazil, a system of inflation targets.
Since 1999, the Selic has established a commitment to adopt measures to keep inflation within a range set by the National Monetary Council. The focus is to maintain economic stability and avoid runaway inflation, which causes the population to lose purchasing power.
Direct influence on the lives of Brazilians
Contrary to what many people think, the rate is not something distant from the population, much less an economic term, since it is part of the population's daily lives.
The Selic works as a minimum interest rate and affects purchasing decisions, investments, inequality and even job creation.
Last year, for example, around 77.91% of Brazilian families were in debt, according to the CNC (National Confederation of Commerce), the highest amount ever seen. This debt was related to the increase in the basic interest rate.
So, the Selic rate is a reference for everything that involves credit in the economy. Thus, with more families in debt, there is less money for consumption. Without consumption, there is no production, which means a chain reaction is created that harms the entire population.
Image: Marcello Casal Jr/ Agência Brasil
