EN 
PT_BR 
The Copom (Monetary Policy Committee) of the Central Bank cut, this Wednesday (17), the basic interest rate (Selic) by 0.75 percentage points, from 3% to 2.25% per year. It is the lowest level since the beginning of the historical series, in 1996. This was the eighth cut in a row, and the fourth announced this year.
In this sense, according to Bernardo Marangon, specialist in electricity markets and director of Exata Energia, the Selic cut could heat up the solar market, as it attracts new investments and reduces financing rates.
“The drop in inflation influenced by low economic activity has led to successive reductions in the rate. With the recovery of the economy, the Selic is expected to rise again. So, Exata believes that now could be a time of opportunity to seek investors and financing to carry out projects”, explains Marangon, highlighting that, most of the time, the rate was double digits.
The expert also commented that, since the beginning of the Real Plan in 1994 – an economic program created to stabilize the country's economy and control high inflation rates – Brazil has been waging a war against Inflation, and the Selic rate is the main instrument used to combat it.
“Selic is very important, as it influences all interest rates. A reduction means lower financing rates, lower returns for fixed income investments and, in theory, heats up the economy, generating greater demand in the market and even influencing the decision of investors who tend to seek investments in the real economy to obtain better results. results”, he concluded.
For the director of Ecori Energia Solar, Arthur Santini, the Selic cut of 0.75% is also great for the photovoltaic sector. “The drop in interest rates encourages both investors and savers to look for and allocate their money somewhere to make a profit, since simply leaving the capital invested at interest in a bank is becoming less and less attractive. In this scenario, investing in solar energy is a very smart option, as it is considered a very low-risk investment with excellent returns”, he highlighted.
About the Selic reduction
The Copom signals that there may be more interest cuts ahead, depending on the scenario. “For the next meetings, the Committee sees it as appropriate to evaluate the impacts of the pandemic and the set of measures to encourage credit and income restoration, and anticipates that any future adjustment to the current degree of monetary stimulus will be residual,” said the Bank Central, in a statement.
In October 2016, the BC began a sequence of 12 cuts in the Selic. During this period, the interest rate fell from 14.25% per year to 6.5% per year. From May 2018 to June 2019, the rate was maintained at the same level. There were ten Copom meetings without changes to the Selic. At the end of July last year, however, the Copom reduced the Selic by 0.5 percentage points, to 6% per year. In December, the rate was already at 4.5% per year.
In February this year, it was reduced again, this time to 4.25%; in March, to 3.75%; and in May, finally, for 3%.
What is Selic?
Selic is the economy's basic rate and serves as a reference for other interest rates (financing) and to remunerate investments adjusted by it. It does not exactly represent the interest charged to consumers, which are much higher.
