Brazil’s central bank has maintained its benchmark interest rate at 15 percent, one of the highest globally, in an effort to control inflation. This decision was made on Wednesday, amidst ongoing attempts to bring inflation rates within target levels. The interest rate has remained unchanged since July, following a series of seven consecutive hikes.

The Monetary Policy Committee (COPOM) cited “high uncertainty” due to tariffs imposed by the United States on certain Brazilian goods as the reason for its cautious stance. Inflation in Brazil has shown signs of slowing down in recent months, but it increased slightly to 5.17 percent year-on-year in September, surpassing the upper limit of the official target rate of 4.5 percent.

While food prices have fallen for the fifth consecutive month, other sectors like energy continue to put pressure on inflation. This decision is seen as a setback for the government of President Luiz Inacio Lula da Silva, who has been advocating for a rate cut to stimulate Latin America’s largest economy.

Financial institutions consulted by the central bank have lowered their 2025 inflation forecast to 4.55 percent, with most expecting the benchmark interest rate to remain at 15 percent until the end of this year or the beginning of 2026. Brazil’s economy is expected to grow 2.4 percent this year, higher than expected, although this represents a marked decrease from the 3.4 percent growth recorded in 2024, according to estimates published by the International Monetary Fund in October.

The maintenance of the high interest rate is significant, as it indicates the central bank’s priority on controlling inflation over stimulating economic growth. This move will likely be closely watched by investors and policymakers, as Brazil navigates its economic challenges. With the inflation forecast and interest rate expectations in mind, the central bank’s decision sets the stage for the country’s economic trajectory in the coming months.