Brazil's Central Bank marks seventh increase of interest rate

(MENAFN) Brazil’s Central Bank has raised its benchmark Selic interest rate by 0.25 percentage points, bringing it to 15 percent annually, the highest level since July 2006. This marks the seventh rate increase since the monetary tightening cycle began in August.

In a statement issued Wednesday, the bank’s Monetary Policy Committee (Copom) indicated that this latest adjustment is expected to be the final one before pausing to assess the effectiveness of the current policy stance.

"The committee anticipates a pause in the interest rate hiking cycle to evaluate the accumulated effects of the monetary adjustment and determine whether maintaining the current rate for a sufficiently long period will ensure inflation converges toward the target," the statement said.

The decision was made unanimously by the Central Bank’s board members. Copom noted that it is closely observing fiscal policy developments and their implications for financial markets and monetary policy.

The bank highlighted ongoing economic challenges, including persistent inflation expectations, strong economic activity, and labor market pressures, which have complicated efforts to stabilize prices.

Recent projections from the Focus survey estimate inflation at 5.25 percent for 2025 and 4.50 percent for 2026—figures that remain significantly above the official target of 3 percent, which includes a tolerance range of 1.5 percentage points.

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