2023-05-05 20:15:06
What we will see in this article:
The last week saw two events that dictate how the economy will continue. One of them was because the Monetary Policy Committee (Copom) of the Central Bank decided, on Wednesday (03), to maintain the Selic rate at 13.75% per annum. It is the level that has been in effect since the beginning of August 2022 and the novelty was amid criticism from President Lula (PT) and other government ministers.
In the statement, the committee assesses that the moment requires “patience and serenity in the conduct of monetary policy”. The team also points out that it may “resume the adjustment cycle if the disinflation process does not go as expected”. This means that it will be able to increase the Selic rate again at another time, if necessary.
This time, the Copom recognizes that this is a “less likely scenario”, different from the previous announcement. They meet every 45 days to define the basic interest rate of the economy. It is the third meeting of the group during the Lula government and the next one is scheduled for June 20th and 21st. Furthermore, it is the sixth time in a row that the committee has decided to keep the rate high.
The second event was there in the United States. The US central bank raised the country’s basic interest rates by 0.25 percentage points and the range from 5% to 5.25% per annum. This was the tenth increase in a row and hope came because the Federal Reserve has also said it may stop raising interest rates.
US inflation influences your investments
Higher interest rates are a way to control inflationary pressure. This is because US inflation not only stimulates the increase in interest rates in the country, but also encourages the attraction of investors to the US economy. Consequently, your investments in Brazil may be affected.
After all, the Brazilian market is considered emerging and riskier, as it has greater volatility. Therefore, an increase in the return on US bonds can boost the outflow of foreign capital from the country — in particular, from the Brazilian stock exchange (B3).
This movement reduces dollar circulation in the national economy and may force the exchange rate upwards. Therefore, there may be an increase in inflation, due to the dollarization of our economy.
In this scenario, the market also becomes more volatile. With a smaller volume of investors, the movements can generate more impacts. Then the swings can be more intense or more frequent, increasing the overall risk.
See how to invest in this scenario here.
If US inflation influences everything and we are still experiencing a time when the Selic rate is at a very high level of 13.75%, then how can we invest? Well, fixed income gains strength and many investors are afraid to put money in variable income investments.
The person who talked to us about this was Fernanda Rosseto, who has extensive experience in the market, working in strategic planning, projects and marketing. It is focused on developing and engaging people, leveraging results and disseminating culture.
On the Renova team, she holds the position of commercial coordinator and understands a lot when it comes to the financial market. Wassup let’s go for it?
High Selic on investments
The truth is that it’s not all bad news, if you know how to take advantage of opportunities. Since the interest rate returned to double digits, fixed income has been in demand again, as it has been an asset class with a positive return in recent months.
This means that the changes impact various sectors of our economy, affecting the demand for credit, corporate debt and investment profitability. In the following way:
- When the Selic rate rises, investments in fixed income end up becoming more attractive, encouraging investors to switch from variable income to lower risk assets.
- When the Selic rate goes down, it increases the attractiveness of variable income and investors’ appetite for risk, and may also make conditions in the real estate market more favorable.
Due to these market movements, investors need to be aware of what the interest rate perspectives will be and how this can affect their decisions when it comes to investing money.
1 – Spend less and invest more
The specialist says that the sign is to spend less and invest more. It is a time of investment possibilities, thinking of the Selic as a path of opportunity. When the Central Bank raises the basic interest rate, it is to contain inflation, therefore, assets that take advantage of these conditions can be beneficial.
2 – Diversify your portfolio to invest with Selic
Investing with the Selic rate high is a way of dealing with the restrictive economy we live in and still thinking about returns. “Compose a diversified portfolio and look for opportunities”, explains Rosseto. Assets that follow the IPCA, CDI and Selic guarantee attractive returns.
3 – Invest with a (reliable) professional
A market movement now is the migration from variable income to fixed income, precisely because it is more attractive under these conditions. But the investment star gives another tip: don’t wait for the moment to rise, draw up a strategy beforehand!
And the purse? Investing with the Selic high in variable income assets is not a problem, it can be a good move to ride the wave after the rate drops. However, count on a professional by your side to help you apply your money without taking too many risks.
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