Insider

Real interest rate ends 2021 at the highest year-end level since 2016

Brazil's ex-ante real interest rate in 2021 was the highest since 2016. Photo: Shutterstock
Brazil’s ex-ante real interest rate in 2021 was the highest since 2016. Photo: Shutterstock

Brazil’s ex-ante real interest rate — that is, the rate calculated before actual inflation data is known — rounded off 2021 at 6.39 percent, the highest year-end rate since 2016, when the ex-ante measurement finished the year at 6.45 percent.

The calculations, made by finance newspaper Valor Econômico, consider the difference between the rates of 360-day interest rate swap contracts and inflation expectations for 12 months ahead.

The increase in real interest rates in 2021 took place amid deteriorating prospects for public accounts and strong inflationary pressure, which, as a consequence, made the Brazilian Central Bank pursue a more contractionary monetary policy, raising the Selic benchmark rate.