Brazil's Central Bank Holds Interest Rate at 13.75% Amid Inflation Pressures

Brazil's central bank kept its benchmark Selic interest rate unchanged at 13.75% per year after its meeting on November 3 and 4, 2026. The monetary policy committee decided unanimously to halt its cycle of rate cuts as inflation expectations worsened and economic uncertainty increased.

The committee's minutes, released on Tuesday, November 10, state that monetary restriction must be greater and last longer than previously appropriate. Officials said inflation remains pressured by demand despite the impact of high rates on economic activity.

“In an environment of unanchored expectations, as is the current case, greater and longer monetary restriction is required than would previously have been appropriate.”

Inflation forecasts have moved further from the 3% target. Market projections show 5.2% for 2026 and 4.8% for 2027, while the central bank estimates 5.6% for 2026, 4.7% for 2027, and 3.5% for the second quarter of 2028.

The minutes identify four supply shocks pressuring prices: higher oil prices due to Middle East conflicts, climate effects from the El Niño phenomenon, the end of the 6x1 work schedule affecting labor costs, and currency depreciation linked to domestic policy uncertainty.

The bank said it should not react automatically to the primary effects of such shocks but must monitor second-order effects. Economists say government spending adjustments will be decisive for any future monetary easing.

The next Copom meeting is scheduled for December 8 and 9. The central bank has not set a date for resuming rate cuts.