For the first time since August 2012, the Central Bank reduced the basic interest rate (Selic). According to astatement released on Wednesday (19), the institution decided to pass the rate of 14.25% to 14% per year .

The last time the institution had reduced the Selic was four years ago, in October 2012, when the rate fell from 7.5% to 7.25%. In a statementreleased after the meeting, the Monetary Policy Committee (Copom) said it made the decision "considering the basic scenario, risk balance and the wide range of information available."

The note also says that the Copom reduced rate is consistent with expectations for inflation in 2017 and 2018. "(...) is compatible with a moderate and gradual easing of monetary conditions," the Central Bank.

This decision comes after nine BC's board meetings in which the dome of the institution chose to keep interest rates unchanged. Until then, the directors did not see the justification setting to change this rate.

 Selic Importance

This interest is important for the economy to be a reference for investment.They are considered the lower rate of return, ie, when a business owner decides to take a part of the project, it evaluates whether the project income is higher or lower than this base rate.

If the return is lower, it does not take the cassette design and apply the money on papers National Treasury, which pay interest close to this value set by the Central Bank. It may also invest in other financial products.

Loans and financing

This basic rate also has a direct influence on how much a consumer pays for loans and financing. When the Fed changes the value it also changes the cost of banks to raise funds, money which will then be loaned to customers.

 If the cost of the bank rises, lending to consumers may also rise. If the lower rate, that cost can download. The basic interest rates still have a great importance because they help control inflation.

Source: Portal Brazil, with the information Central Bank