Brazil’s monetary policy committee, Copom, decided on Wednesday, 4 November, to halt its cycle of rate cuts and keep the Selic at 13.75 percent per year. The decision ended a run of five consecutive cuts that began in March.
The Central Bank cited accelerating inflation, deteriorating expectations and greater international uncertainty.
Inflation outlook worsens
The Central Bank raised its inflation projection for 2027 to 4.7 percent, up from 3.9 percent previously. Its projection for the second quarter of 2028 stands at 3.5 percent, against a target of 3 percent.
Analysts flagged a further rate hike as one of the risks ahead.
Economists expect a long pause
Natalie Victal, chief economist at SulAmérica Investimentos, said the communication delivered the maintenance of rates but showed that the bar to debate a hike is high. She said the strategy she has in mind is higher for longer.
Cristiano Oliveira, director of economic research at Banco Pine, said the removal of the reference to the total magnitude of the calibration cycle suggests the pause could extend beyond the December meeting. Economists expect the rate to stay at 13.75 percent in December, with cuts resuming in 2027 if inflation expectations, the fiscal scenario and the economic slowdown allow it.
Related: Turkish central bank cuts policy rate to 36% in first cut in nine months · Brazil's Selic held at 13.75%; country tops real-rate ranking
Source: Central Bank
