- Decision
- Lower
- Rate change
- 25 bps
- selic rate
- 14.75%
Brazil’s Monetary Policy Committee (Copom) cut the Selic policy rate by 25 bp to 14.75 % p.a., launching what it calls a “monetary policy calibration cycle” to sustain the ongoing moderation in economic activity and gradual easing of headline and core inflation, which nonetheless remain above target and alongside de-anchored expectations for 2026-27 (Focus at 4.1 % and 3.8 %; Copom projection for Q3-2027 at 3.3 %). This follows a cumulative 75 bp increase to 15.00 % between March and June 2025 and an extended pause through January 2026. The committee notes labour-market resilience but observes a recent “softening” in activity and elevated uncertainty over the inflation path, exacerbated by the escalation of Middle East conflicts that have tightened global financial conditions and heightened asset-price and commodity-price volatility. While reaffirming vigilance over domestic fiscal developments and the risk that a persistently weaker BRL could lift prices, Copom also flags downside risks from a sharper global or local slowdown and lower commodity prices. It stresses that future rate adjustments will be data-dependent, with the pace of easing conditioned on fresh information about the duration and economic impact of the regional conflict to ensure convergence of inflation to target while smoothing economic fluctuations.
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.