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Central Bank warns to complete economic reforms

Copom Minutes

In a document, the Board of Directors of the Central Bank stressed that, in order to continue the process of lowering interest rates, it is necessary to approve the pension reform

In the minutes of the meeting in which the Selic interest rate was reduced to a historic low of 7% per year, the Central Bank's board reinforced the need to approve the Social Security reform to maintain the positive scenario of inflation and interest rates. The considerations were disclosed on Tuesday (12) and bring assessments of the Monetary Policy Committee (Copom) on the Brazilian economy. 

For the institution, a possible frustration of the economic reforms can raise the risk, impacting the inflation and the interest policy of the Central Bank.

At the same time, the board considered that the external economic scenario could also affect inflation, but that Brazil has strong fundamentals to react to the eventual worsening of the global scenario.

"The Copom members considered the risk to the Brazilian economy of a setback in this international scenario ... in a context of frustration of expectations about the necessary reforms and adjustments in the Brazilian economy," the bank said.

According to the Central Bank, this scenario of continuity of economic reforms is important for the follow-up of the process of falling structural interest rates. "The Committee emphasizes that the process of necessary reforms and adjustments in the Brazilian economy contributes to the fall in its structural interest rate," the document says.

Considered essential for rebalancing public accounts and eliminating privileges, the Pension Plan provides for the adoption of a minimum age of 65 for men and 62 years for women to access the benefit as a way to stop the exaggerated growth of social security accounts.

Source: Government of Brazil, with information from  the Central Bank