Policy rate in Brazil

The official interest rate (the Selic rate) set by the Central Bank of Brazil as the benchmark for its monetary policy. It is the reference price of money in the Brazilian economy.

It is not a statistical calculation: it is decided by the Central Bank of Brazil's Monetary Policy Committee (Copom) at its scheduled meetings, in line with its inflation target and the state of the economy.

Changes in the Selic feed through to market rates, credit and the exchange rate, and from there to consumption, investment and prices. It is the central bank's main anti-inflation tool; a hike tends to support the real, while a cut tends to weaken it.

It is a discretionary decision whose effects on the economy act with long and variable lags, and it must be coordinated with fiscal policy to achieve the best outcomes.