Copom halts cuts and holds Brazil's Selic rate at 13.75% a year

Summary written by the Panorama newsroom from the sources listed below. Facts are attributed to the original publications.

The Monetary Policy Committee (Copom) of Brazil's Central Bank unanimously decided on Wednesday (4) to keep the benchmark interest rate, the Selic, at 13.75% a year, g1 reported. With this, the committee halts the cycle of cuts that began in March this year.

In its statement, the committee argued that rising uncertainty, higher inflation expectations and a sharper slowdown in the domestic economy create a challenging scenario that calls for "serenity and caution" in setting interest rates. The Central Bank also said it is closely monitoring the de-anchoring of longer-term expectations.

According to g1, after Lula's victory for a fourth term was confirmed, the financial market raised its inflation and interest rate projections, cut growth estimates and began forecasting a stronger dollar. The Focus Bulletin released on Tuesday (3) pointed to inflation of 5.22% in 2026 and 4.76% in 2027. Copom, for its part, raised its projection for the second quarter of 2028, the relevant horizon for monetary policy, from 3.4% to 3.5%.

Abroad, the Central Bank cited a more adverse environment due to prolonged conflicts in the Middle East, which are pushing up oil prices, and tighter monetary policy in advanced economies. At home, it pointed to a sharper moderation in activity, a still-resilient labor market and inflation above the upper limit of the tolerance range around the 3% target, which runs from 1.5% to 4.5%.

With the decision, Brazil remains at the top of a ranking of 40 countries compiled by the websites MoneYou and Lev Intelligence: discounting expected inflation over 12 months, Brazil's real interest rate is 8.45% a year, ahead of Russia at 6.79%.