Copom maintains Selic at 13.75% and reignites the debate on interest rates, targets and public accounts

The Monetary Policy Committee (Copom) maintained the Selic rate at 13.75% per year, unanimously (7 to 0), interrupting the sequence of cuts that began after interest rates remained at 15% from June 2025 to March 2026. According to the roadmap that had been followed, the expectation was for a reduction to 13.50%. According to the Investidor Sardinha channel, the market reacted well to the decision, even though Petrobras is going through a difficult time.

In the presenter's assessment, the maintenance signals that the Central Bank, chaired by Gabriel Galípolo, did not embark on defending a forced drop in interest rates, a thesis he associates with André Lara Rezende. He recalls that Galípolo was nominated by President Lula on August 28, 2024, approved by 26 to 0 in the Economic Affairs Committee and by 66 to 5 in the Senate plenary, with a mandate until 2028.

Inflation above the ceiling and rising expectations

The background is inflation. The target is 3%, with a ceiling of 4.5%, and the IPCA in 12 months is 4.58%. According to the numbers mentioned in the video, market expectations for 2026 went from 4.9% in September to 5.2% in November; for 2027, from 4.3% to 4.8%. The Central Bank's projection for 2028 rose from 3.2% to 3.5%.

The presenter questions whether it is worth maintaining a target that is not met, arguing that no developed country has managed to achieve inflation at this level, in a context that includes the oil shock and the Strait of Hormuz. He points out, however, that government spending also exceeded, and remembers that the 3% target was maintained by Lula's decree in June 2024. Two of the three votes that define the target, he notes, are from government ministers.

Does the market want high interest rates?

For Investidor Sardinha, the idea that the financial market benefits from the high Selic is false. He mentions that Brazil currently has the highest real interest rate among 40 economies, at 9.49%, compared to the average of 1.28%, and the fourth highest nominal interest rate. It also points to 46 IPOs in 2021, none between 2022 and 2025 and just one in 2026, in addition to 54 companies in the queue, 2,466 requests for judicial recovery and 9.2 million negative companies.

The channel maintains that the price reaction responds to public accounts. According to the data presented, the day after the first round the dollar fell 4.4%, future interest fell 1.16 points and the Ibovespa rose 7.7%. After the second round, the dollar would have jumped from R$4.99 to R$5.42, future interest increased 1.94 points and Ibovespa futures fell 14.8%, with a loss of around R$700 billion in market value. The future interest rate for 2029 went from 12.22% on October 9th to 15.04% on November 4th.

The risks of cutting hard

The presenter uses the experiences of Brazil and Turkey to warn against forced reduction. The Selic rate of 7.25% in October 2012 was followed by inflation of 10.67% in 2015 and interest rates of 14.25% in July 2015. In Turkey, according to him, inflation reached 85.5% in October 2022 and the base rate needed to go to 50%. He recognizes that Turkish debt is dollarized, unlike Brazil's, and states that the cost falls on the poorest.

Gross debt, says the channel, went from 71.7% of GDP in December 2022 to 78.6% in 2025 and 82.9% in September 2026. Each point less in the Selic would reduce debt by R$63 billion. In the presenter's view, the path to lower interest rates goes through a solid fiscal plan, predictable rules and commitment to the debt trajectory. He says that the fall cannot be sustained without confidence and that the scenario does not imply a collapse of the stock market, but a final phase of a model that, in his assessment, will lead to a rupture.

Automatically translated from Portuguese.