Brazil's central bank cut its benchmark Selic rate by 25 basis points to 14.00% on Wednesday, the fourth straight reduction and the lowest level since March 2025. Policymakers gave no clear signal on further easing, saying the next move depends on data ahead of a September meeting.
Brazil's central bank unanimously cut its benchmark Selic rate by 25 basis points to 14.00% on Wednesday, its lowest level since March 2025. The decision extends a rate-cutting cycle that began in March, as easing price pressures and signs of slowing growth give policymakers greater confidence that inflation is converging toward target.
The rate-setting committee, known as Copom, matched the expectations of 38 of 42 analysts polled by Reuters in delivering a fourth consecutive cut.
Inflation eases, growth cools
Inflation has run below expectations since Copom's June meeting, while economic activity indicators have pointed to a clearer loss of momentum, reinforcing expectations of a more benign outlook. At that June meeting, policymakers drew scrutiny by placing greater emphasis on inflation projections beyond their formal policy horizon to explain further easing even as their balance of risks deteriorated.
Copom holds off on a September signal
However, the central bank stopped short of signaling its next move, making clear that any further action depends on incoming economic data ahead of a September policy meeting. According to Copom's policy statement: "to keep monetary policy adequately restrictive to ensure convergence to the inflation target".
Inflation forecasts trimmed for 2026
The bank forecast annual inflation of 3.2% over its 18-month policy horizon, now shifted to the first quarter of 2028, in line with its June estimate. Brazil's official inflation target is 3%, with a tolerance band of 1.5 percentage points on either side.
For 2026, the central bank lowered its inflation forecast to 5.1% from 5.2% in June, while its 2027 estimate rose to 3.8% from 3.7%.
Attention now turns to whether the easing cycle extends into September, with Copom offering no clear forward guidance.
Source: Investing.com
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