Brazil and currencies

Selic Rate

Brazil's key interest rate, set by the Central Bank's monetary policy committee (Copom) about every six weeks.

Why does it matter?

It influences every other interest rate in Brazil, from loans to fixed income, and it is the Central Bank's main tool against inflation.

How do I read it?

When the Selic rises, borrowing costs more and fixed income pays more, which tends to weigh on share prices; when it falls, the opposite. The Selic has usually been much higher than U.S. interest rates.

Example

With the Selic at 10% a year, an investment paying 100% of the CDI earns close to 10% a year, before taxes. If the Selic falls to 8%, that return falls with it.