The decline in inflation and the economic slowdown led the Brazilian Central Bank to leave interest rates unchanged. Unanimously, the Monetary Policy Committee (Copom) kept the Selic rate, the economy’s benchmark interest rate, at 15 percent per year.

In a statement, Copom gave no indication of when it might begin to cut interest rates. As in its last meeting, it reiterated that the current scenario is marked by significant uncertainty, which requires caution in monetary policy, and that the bank’s strategy is to maintain the current Selic rate for an extended period.

Notícias relacionadas:

• Keeping interest rates at 15% worries Brazilian productive sector.
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• November’s 0.18% inflation brings rate back to target.

“The committee believes that the present strategy of maintaining the current interest rate for a prolonged period is appropriate to ensure that inflation converges with the target. The committee emphasizes that it will remain vigilant, that future monetary policy steps may be adjusted, and that, as usual, it will not hesitate to resume the adjustment cycle if it deems it appropriate,” the statement said.

This is the fourth consecutive meeting in which Copom has kept the basic interest rate unchanged. The rate is at its highest level since July 2006, when it stood at 15.25 percent per year. The Selic rate reached 15 percent per year at the June meeting and has remained at that level since.

Inflation

The Selic rate is the Central Bank’s main tool for curbing Brazil’s official inflation, as gauged by consumer price index IPCA. In November, it stood at 0.18 percent, the lowest level for the month since 2018. With this result, the index has accumulated a 4.46 percent increase over 12 months, returning to within the ceiling of the continuous inflation target.

Under the new continuous target system, in effect since January, the inflation target to be pursued by the Central Bank, as defined by the National Monetary Council, is 3 percent, with a tolerance interval of 1.5 percentage points above or below. In other words, the lower limit is 1.5 percent and the upper limit is 4.5 percent.

In this model, the target is calculated monthly based on the accumulated inflation over the previous 12 months.

The basic interest rate is applied in government bond trading through the Special Settlement and Custody System (Selic) and serves as a benchmark for other interest rates in the economy.

Brazil’s official inflation closed out November at 0.18 percent, bringing the country’s price index IPCA to 4.46 percent over 12 months.

As a result, the IPCA returns to the government’s target range of up to 4.5 percent for the 12-month period. In the 12-month span ending in October, the rate was 4.68 percent. The index had been outside the tolerance range for 13 months. 

Notícias relacionadas:

• October inflation stands at 0.09%, lowest for the month since 1998.
• Brazilian economy grows 0.1% in third quarter.

The data were released Wednesday (Dec. 10) by the statistics bureau IBGE.

The November figure is the lowest for the month since 2018, when the variation stood at -0.21 percent.

In October, the IPCA had been 0.09 percent. The main impact on the acceleration from October to November was the price of airline tickets, which rose 11.9 percent, representing 0.07 percentage points of the total inflation for the month.

Target

The government’s inflation target is three percent over 12 months, with a tolerance of 1.5 percentage points above or below – a maximum of 4.5 percent.

Since the beginning of 2025, the target assessment period has been based on the previous 12 months, rather than just the end of the year (December). The target is considered unmet if the tolerance range is exceeded for six consecutive months.

According to research manager Fernando Gonçalves, if December inflation stays at up to 0.56 percent, the country will end the year with the IPCA at the upper limit of the government’s target. The December result will be announced on January 9.

The IPCA calculates the cost of living for families with incomes between one and 40 minimum wages. In total, prices are collected for 377 products and services. As it stands today, the minimum wage is BRL 1,518 (USD 277.18). Prices are collected in ten metropolitan areas across Brazil.

Interest rates

On Wednesday night, the Central Bank’s Monetary Policy Committee (Copom) is expected to announce the Brazilian benchmark interest rate, the Selic, currently at 15 percent per year — the highest level since July 2006 (15.25%).

The upward trend began in September last year, due to the Central Bank’s concern about rising inflation.

The Selic is the government’s main instrument for combating inflation. High interest rates make credit more expensive and discourage investment and consumption, thus acting as a brake on the economy, reducing demand for products and services and cooling inflation as a result.