What is The Selic Rate

What is The Selic Rate

The Selic rate (Special System for Settlement and Custody) is the interest rate established by the COPOM (Monetary Policy Committee), which controls all transactions in the Brazilian financial market. It is applied to loans between financial institutions, and also to bank investments made in federal securities, such as the DARF, for example. In addition, it is also through Selic that banks calculate the amount paid in interest on their customers’ financial investments.

The Selic percentage is unstable: it rises and falls, according to the movement of consumers, under the laws of supply and demand. If it is too low, inflation occurs, and the federal government is forced to increase it again. If it increases too much, the country goes into recession, the population demands measures from the federal government, and the federal government lowers it again. It is worth remembering that the lower the interest rates, the hotter and busier the market becomes.

The Selic is just one of the federal rates used based on the country’s finances. In addition, there are also the TBF (Basic Financial Rate), TR (Reference Rate) and the TJLP (Long Term Interest Rate).

Check the evolution of the Selic Rate between 2006 and 2011 in the chart below:

Calculation of Selic Rate/Interest

Through the BACEN website (Central Bank of Brazil), it is possible to calculate the interest rates. search the ”Citizen” profile on the left side of the page, click on “Calculadora do Cidadão” and choose the desired calculation option: Financing with Fixed Installments, Future Value of a Capital, Investment with Regular Deposits or even Correction of Values.

* If you want to check interest rates on credit operations, the Central Bank also makes these percentages available. select the option “Citizen” on the left side of the page, click on “Interest Rates and Credit Operations” and choose from the available options, which are divided into Individuals and Legal Entities.

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