- Decision
- Raise
- Rate change
- 50 bps
- Selic rate
- 14.75%
Brazil’s Monetary Policy Committee (Copom) raised the Selic rate by 50 bp to 14.75 percent, citing still-elevated headline and core inflation, de-anchored inflation expectations, resilient domestic demand and labour-market pressures, alongside an adverse and uncertain global backdrop dominated by shifts in United States trade policy. The move follows a 100 bp increase in March that took the policy rate to 14.25 percent. Copom noted that inflation expectations for 2025 and 2026 from the Focus survey remain above target at 5.5 percent and 4.5 percent, while its own reference-scenario projection places 2026 inflation at 3.6 percent. Activity and employment indicators continue to show strength despite early signs of moderation, reinforcing the need for a “significantly contractionary” stance for a prolonged period. The Committee highlighted heightened two-sided risks around its baseline, from persistent services inflation and fiscal or external shocks on the upside to sharper domestic or global slowdowns and lower commodity prices on the downside; the assumed reference path includes a USD/BRL rate of 5.70 and oil prices tracking futures for six months before rising 2 percent annually. Global financial conditions have turned more volatile amid greater geopolitical tension, demanding caution from emerging markets. Looking ahead, Copom pledged vigilance and said the pace of any further tightening will depend on incoming data, the evolution of inflation expectations and the balance of risks.
Rate evolution
Over the period, the Central Bank of Brazil’s Monetary Policy Committee (Copom) raised the Selic rate by 25 basis points to 15.00% in June 2025, held it there through January 2026, and then cut it in five 25 basis point steps to 13.75% by September 2026, leaving it 100 basis points below where the sequence began. The pause reflected inflation and underlying measures staying above target, deanchored expectations, resilient activity and labor-market pressures despite slower growth, and a cautious response to uncertainty from United States policy, domestic fiscal developments and geopolitics, with inflation risks judged higher than usual on both sides. As inflation and expectations improved late in 2025, Copom shifted from questioning whether a prolonged hold would suffice to judging that strategy appropriate, and in January signalled easing could start at the next meeting if the expected scenario materialised.
Copom then cut five times as prolonged restrictive settings showed transmission to the slowdown in activity, but it continued to flag uncertainty over Middle East conflicts, global financial conditions and monetary policy in some advanced economies. In June 2026, the committee judged the accumulated degree of restriction allowed different rate paths consistent with convergence and that paths ensuring inflation returned to target in the first quarter of 2028 were compatible with smoothing macroeconomic fluctuations, even as first-quarter activity accelerated, the labor market remained resilient, and headline and underlying inflation moved further from target and above its upper bound in the latest reading. After cutting the Selic rate to 14.00% in August as activity moderated and inflation eased, Copom lowered it to 13.75% in September as activity continued to slow while remaining resilient, the labor market stayed tight, and headline and underlying inflation fell below the tolerance interval’s upper limit but remained above target, while deanchored expectations, domestic fiscal developments and elevated two-sided inflation risks with upward asymmetry continued to require caution and an adequately restrictive stance.