Falling inflation will favor a reduction in the Selic rate

The president of the Federation of Agriculture and Livestock of the State of São Paulo (FAESP), Fábio de Salles Meirelles, assessed that the rise in interest rates in recent months appears to have contained inflation, which is showing signs of cooling down, but that the sector expects the Bank to Central (BC) will start reducing the Selic rate in the coming months. Meirelles commented on the Copom decision this Wednesday (October 26) that maintained basic interest rates at 13,75% per year.

“Considering the importance of resuming higher rates of economic growth, it is important that monetary policy is calibrated in order to facilitate access to credit, with lower real interest rates”, he considered.

Recalling that Brazil is breaking a new record in the 2021/2022 grain harvest, the president of Faesp highlighted the significance of the Plano Safra credit lines, whose interest rates, especially for small and medium-sized producers, have lower rates compared to average rates of market. “However, considering the size of agriculture, the growing demand for resources and high production costs, it is impossible to meet the sector’s needs. Therefore, it is important to find alternative sources of resources and more favorable conditions for financing lines”.

Meirelles also stressed that it is important that, regardless of the Selic, the spread in banking institutions is lower, as, at current levels, the money raised by rural producers to finance agricultural activities is exaggeratedly expensive.

“In any case, we hope that inflation will continue to fall and that interest rates will gradually be readjusted downwards, in order to stimulate investments and growth in the national economy, in which agribusiness plays a significant role”, he concluded.