- Decision
- Maintain
- Rate change
- 0 bps
- selic rate
- 13.75%
The Central Bank of Brazil held the Selic rate at 13.75% a year, citing higher inflation expectations, increased uncertainty and a sharper domestic slowdown, following reductions from the 15.00% level held in November 2025 to the current level in September 2026. Headline inflation and average underlying measures accelerated above the upper limit of the target tolerance band, while Focus survey inflation expectations for 2026 and 2027 moved further from target to 5.2% and 4.8%, respectively. The central bank’s reference-scenario inflation projection rose to 3.5% for the second quarter of 2028, its relevant policy horizon, incorporating recent supply shocks and using the survey’s interest-rate path. Economic activity slowed more sharply, particularly in cyclical sectors, while the labor market remained resilient but showed signs of cooling. The external environment became more adverse as prolonged Middle East conflicts pushed up oil and petroleum-product prices and advanced economies pursued more restrictive monetary policy. With inflation risks elevated and tilted to the upside, the central bank stressed caution and said it would monitor developments to maintain sufficient monetary restraint to ensure inflation converges 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.