- Decision
- Lower
- Rate change
- 25 bps
- selic rate
- 14.5%
The Central Bank of Brazil’s Monetary Policy Committee (Copom) lowered the Selic rate by 25 bp to 14.50 % per annum, judging that a measured easing is compatible with its strategy to return inflation to target even as domestic growth moderates and the labour market stays resilient while headline and underlying inflation have recently risen further above the goal. After raising the policy rate to 15.00 % in June 2025 and holding it until a first 25 bp cut in March 2026, Copom has now delivered a second consecutive reduction. In its reference scenario the Committee projects IPCA inflation at 4.6 % for 2026 and 3.5 % in 2027 Q4, while Focus survey expectations remain elevated at 4.9 % for 2026 and 4.0 % for 2027. Copom highlights unusually high two-sided risks, with upside pressures from de-anchored expectations, resilient services prices and potential currency depreciation, offset by possible sharper-than-expected domestic or global slowdowns and lower commodity prices; it continues to track the fiscal stance and its effect on financial assets. The global outlook is clouded by Middle East conflicts that have tightened financial conditions and increased asset and commodity-price volatility. The Committee reiterates a cautious, data-dependent approach, signalling that the pace and extent of further rate calibration will hinge on new information about the conflicts and their impact on the inflation path.
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.