The Selic rate has undergone four cycles of changes in the last five years. The reduction between 2020 and 2021 from 6.5% to 2% was followed by an increase to 13.75%, reaching 10.5% in the summer of 2024. The Central Bank of Brazil was forced to resume a monetary tightening policy due to macroeconomic instability, political uncertainty, the arrival of a new administration in the United States, and legitimate concerns about rising inflation. Six consecutive increases raised the Selic to a record level of 14.75% in May 2025. How does this change in the Selic rate affect technology companies and the Brazilian financial market?

The Selic is the main interest rate in the Brazilian financial market. It is set monthly by the Monetary Policy Committee (COPOM) of the Central Bank of Brazil. This committee defines inflation targets and guidelines to maintain the country’s economic stability.

The Selic rate is the weighted average of credit operations in federal public securities. It also influences other interest rates, such as credit, deposits, and investments. Additionally, it is an important indicator of the current situation of the Brazilian financial market.

The Selic can be increased or decreased according to the economic situation and the appreciation of the real. Increasing the Selic combats inflation but makes loans more expensive. Reducing the rate stimulates growth but increases prices.

The Selic has fluctuated between 2% and 14.75% in recent years, reaching its highest level. Despite this, the Committee remains cautious and emphasizes the high inflation rate. If prices stabilize, the Selic may be reduced. With the tariff war with the USA, increases may be inevitable.

Brazil has a well-developed technology market, with operations in engineering, aviation, IT, and others. It is also an important regional hub for startups and venture capital funds, especially in São Paulo.

Main aerospace companies in Brazil:

Main national IT companies:

The telecommunications sector is essential in Brazil, which is the fifth-largest digital economy in the world. More than 94% of the population has good mobile coverage, including in rural areas. Leading companies: Vivo (Telefônica Brasil), Claro, and TIM Brasil.

Other prominent technology companies:

According to the World Bank, in 2022, more than 360 Brazilian companies were listed on the stock exchange, including all major technology sector companies. Investors can invest in stocks directly on the exchange, through brokers, online platforms, or ETF funds.

B3 S.A., located in São Paulo, is one of the largest exchanges in the world. It was formed in 2008 with the merger between Bovespa and BM&F. In 2017, it was officially renamed B3 S.A. – Brasil, Bolsa, Balcão.

The main index of B3 is the Ibovespa, which tracks about 90 stocks, representing 80% of the traded volume. There are also indices like Brazil 50, Mid-Large Cap, Small Cap, and others.

The rise in the Selic generally leads to a drop in technology stocks, while rate cuts tend to appreciate them. This occurs because the technology sector is seen as riskier and more sensitive to changes in interest rates.

Consequences of the Selic increase for technology companies:

Effects of the Selic reduction:

We suggest that investors and traders observe the negative correlation between the Selic rate and the performance of technology stocks in the country. However, it is important to remember that fundamental analysis should consider not only the macroeconomic context but also the financial indicators of companies and the sector as a whole.