The National Confederation of Industry (CNI) welcomed the decision of the Central Bank Monetary Policy Committee (COPOM) to interrupt the ascending curve of the SELIC key interest rate as a move in the “right” direction. During a meeting on Wednesday (Aug. 2), the committee unanimously decided to keep the rate at its current 14.25% per annum, breaking a cycle of seven consecutive increases. According to a statement released by CNI, holding the rate “helps prevent the recession from deepening further.”

However, according to CNI, the current high rate “can lead to a deterioration in the economic activity, impacting the labor market and household income, with effects in the future trends for inflation.”

The industrial association advocated an “assertive” fiscal policy and an agenda that favors competitiveness as strategies to address the current economic scenario. “The difficulties in the fiscal area, with the fiscal target successively tightened and unsuccessful spending cut attempts, cause disappointment and mitigate the credibility of economic policy, making the adjustment long and costly,” the statement read, urging structural, clear and quick measures to revive confidence.

The decision of the Monetary Policy Committee had been anticipated by the market and hinted by the monetary policymaker. In the statement that followed the meeting on Wednesday, the committee reiterated that “maintaining the benchmark interest rate at this level for long enough is a needed measure to help force the inflation toward its target by the end of 2016.”

The inflation target was set at 4.5% plus or minus two percentage points. For 2015, the government expects the Broad Consumer Price Index (IPCA), the rate that provides the official inflation gauge, should close out the year at 9.25%, above the target ceiling of 6.5%. For 2016, the government is considering a projected 5.4% inflation in the expectation that the economic activity should close out this year at a low of 1.8%.