Brazil’s central bank has maintained its benchmark interest rate at 15% for the fifth consecutive time, citing a “still uncertain external environment” as the primary reason. The Monetary Policy Committee (Copom) made this decision to continue taming inflation in Latin America’s largest economy. The Selic rate, which has been at its highest level since July 2006, is expected to undergo a “flexibilisation” of monetary policy at the next meeting in March.
The decision is seen as a setback for the administration of President Luiz Inacio Lula da Silva, who has been advocating for rate cuts since his return to power in 2023. Despite his efforts, the central bank has raised the benchmark interest rate seven times between September 2024 and June 2025, leaving it unchanged since July last year.
The move comes on the same day the US Federal Reserve decided to hold its benchmark interest rate, despite pressure from President Donald Trump for cheaper money. Brazil’s inflation rate for 2026 and 2027 remains above the target of 3%, prompting the central bank to closely monitor the impacts of the geopolitical context on price increases.
The trade relationship between Brazil and the US has been a significant factor in the country’s economic landscape. In August, the US imposed a 40% tariff on Brazilian exports, which was largely lifted in November after a meeting between Trump and Lula. The tariffs had a notable impact on the price of coffee, a key Brazilian export.
The central bank’s decision to maintain the interest rate is a cautious approach to managing inflation and navigating the complex global economic environment. As the bank prepares to reassess its monetary policy in March, it will be closely watched by investors and policymakers alike. The outcome will have significant implications for Brazil’s economy and its position in the global market. With inflation remaining a concern, the central bank’s next move will be crucial in determining the country’s economic trajectory.
