You are probably already familiar with the acronym Selic from listening to or reading on the news, right here among our various articles you find that term.
But, do you know what this abbreviation means? And yet, how can this rate impact your life?
We’ll explain everything next, check it out.
What is Selic?
Selic is the abbreviation for Special System of Settlement and Custody, which represents the interest rate of the national economy, serving as reference for the value of credit in the country.
The Selic value is adopted based on the country’s economic scenario. For this, committees ( Copom ) are held eight times a year with directors of the Central Bank that analyze and define it.
Selic controls credit operations in both the domestic and international markets. It also acts to help the Central Bank monitor inflation and buy and sell securities.
How this rate can affect your life
Well, as the country’s model credit value, the rate is literally at all related to the consumer market.
Operations involving credit card, credit, overdraft and savings are calculated according to the value of the Selic. Banks also use it to set the amount of interest on a loan.
Investors, especially those who invest in CDI funds, also do not escape, since most of the portfolio of these funds accompany the rate.
Selic ratio and inflation
As mentioned, the Selic assists in monitoring inflation in the country.
In practice, when inflation is high the Central Bank tends to raise interest rates, and so the cost of credit will increase.
This oscillation causes consumption to fall, settling in store inventory for traders, which lowers product prices and puts the money back into circulation.
Otherwise, when the rate is low, inflation retreats, and thus consumption is stimulated again.
- What is inflation and how does it hit you?