- Decision
- Maintain
- Rate change
- 0 bps
- selic rate
- 15%
Brazil’s Monetary Policy Committee (Copom) left the Selic rate unchanged at 15.00 percent at its 273rd meeting, arguing that sticky headline and core inflation above target, de-anchored inflation expectations for 2025-26 (4.8 percent and 4.3 percent, respectively) and a still-tight labour market require “significantly contractionary” policy to secure convergence of inflation to the 3 percent goal by the first quarter of 2027 (projection: 3.4 percent). After a 25 bp hike in June that lifted the Selic to 15.00 percent, the rate has been on hold in July and now September. The communiqué offers no changes to the operational framework beyond keeping the policy rate level. Domestically, activity is moderating but remains resilient, while services prices and labour-market strength pose upside risks; downside risks stem from a sharper-than-expected domestic or global slowdown and lower commodity prices. Externally, heightened geopolitical tensions and uncertainty surrounding US economic and trade policies have tightened global financial conditions and increased asset-price volatility, with Copom warning that a persistently weaker BRL could add to inflation. The Committee pledges vigilance, judging that the current stance may need to be maintained “for a very prolonged period” and reiterating its readiness to resume rate increases if necessary to anchor expectations and safeguard convergence to target.
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.