With the Rise of the Neutral Interest Rate in Brazil, Does it Still Make Sense to Invest in Real Interest Rates Between 6% and 7%?

When discussing monetary policy, an extremely important variable is the neutral interest rate. In simple terms, it is the equilibrium interest rate, which neither tightens nor stimulates the economy. It is based on this information that the central bank adjusts the Selic rate in search of reaching the inflation target. When the macroeconomic context signals the need for a higher interest rate to contain eventual inflationary pressures, the Selic rate must remain above the neutral level for some time.

In this article, we will analyze if investing in real interest rate assets in this environment of a high neutral interest rate is a wise decision.

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