Brazil's Central Bank Pauses Rate-Cutting Cycle

2026-11-04 21:57 By Isabela Couto 1 min. read

Brazil's central bank kept the benchmark Selic rate unchanged at 13.75% at its November meeting, pausing its rate-cutting cycle as worsening inflation expectations and mounting fiscal pressure complicate the policy outlook.

Expectations for loose public spending are driving inflation forecasts further above the 3% goal.

Copom noted that the external environment has become more adverse amid prolonged conflicts in the Middle East, which drove up oil and refined product prices, as well as tighter monetary policy in advanced economies.

Domestically, indicators released since the previous meeting point to a sharper moderation in economic activity, particularly in more cyclical sectors.

The labor market remains resilient but is showing signs of marginal cooling.

Meanwhile, headline inflation and the average of underlying inflation measures have risen, remaining above the upper bound of the inflation target tolerance range.

Copom emphasized the need for caution amid heightened uncertainty.



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Brazil's Central Bank Pauses Rate-Cutting Cycle
Brazil's central bank kept the benchmark Selic rate unchanged at 13.75% at its November meeting, pausing its rate-cutting cycle as worsening inflation expectations and mounting fiscal pressure complicate the policy outlook. Expectations for loose public spending are driving inflation forecasts further above the 3% goal. Copom noted that the external environment has become more adverse amid prolonged conflicts in the Middle East, which drove up oil and refined product prices, as well as tighter monetary policy in advanced economies. Domestically, indicators released since the previous meeting point to a sharper moderation in economic activity, particularly in more cyclical sectors. The labor market remains resilient but is showing signs of marginal cooling. Meanwhile, headline inflation and the average of underlying inflation measures have risen, remaining above the upper bound of the inflation target tolerance range. Copom emphasized the need for caution amid heightened uncertainty.
2026-11-04
Brazil Central Bank Cuts Selic to 13.75%
Brazil’s central bank cut its benchmark interest rate by 25 bps to 13.75% at its September meeting, in line with market expectations. The bank noted that the external environment remains uncertain due to the lack of clarity surrounding armed conflicts in the Middle East and uncertainty over monetary policy in some advanced economies. Domestically, indicators released since the previous meeting point to a gradual moderation in economic activity, particularly in more cyclical sectors, although activity remains resilient and the labor market remains tight. Recent data show that headline inflation and the average of underlying measures have slowed, standing below the upper bound of the tolerance interval but still above the target. The Copom reiterated that the current scenario, marked by significantly higher uncertainty, deanchored inflation expectations, and elevated risks around the baseline scenario, calls for caution.
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