The SELIC - Special Settlement and Custody System is a mechanism used by the COPOM - Monetary Policy Committee to direct the economy. Observing SELIC oscillations over the years helps in understanding economic and monetary policies.
Basically, it can be said that SELIC is the basic interest rate of the Brazilian economy, and all other rates charged by banks, creditors, and financial institutions are calculated based on it.
SELIC's full history can be accessed on the website of the Central Bank, which has been publishing information since 1996. At the end of the 1990s, SELIC reached a goal of 45% per year and over the following decade, the interest rate gradually fell and remained unchanged until the end of 2009. Between 2010 and 2017, it was between 7% and 14.25% a year and has been falling since then.
But how to interpret those numbers? In the direction of the economy, when the interest rate is high, credit becomes more expensive in the market, since banks and creditors base the cost of your loans and products at the SELIC rate. If the cost of credit is high, people consume less and the economy slows down. The opposite also occurs, with lower credit, consumption is stimulated and the economy is heated.
Some financial investments in fixed income too are indexed to the SELIC rate, such as Treasury Direct and Savings. However, since SELIC is the market's basic interest rate, all other remuneration tends to be based on its fluctuations.
According to Central Bank projections for SELIC through the Focus Bulletin, released in August 2022, the market consensus continued for the 9th straight week at 13.75%. A month ago, the percentage was already 13.75%. Likewise, the median for SELIC at the end of 2023 remained at 11.00%, from 10.75% four weeks earlier. Also according to the Focus Bulletin, the forecast for Selic at the end of 2024 continued at 8.00%, the same percentage as a month ago. The median for the end of 2025, on the other hand, was maintained at 7.50%, repeating the rate of four weeks before.
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