Brazil Interest Rate

Central Bank of Brazil cuts rates in August

Yet another 25 basis point cut: At its meeting on 4–5 August, the Monetary Policy Committee (COPOM) of the Central Bank of Brazil (BCB) reduced its SELIC rate by a further 25 basis points to 14.25%, mirroring its prior four decisions. August’s easing brought cumulative cuts to 100 basis points since the BCB started its easing cycle in March 2026 and matched market expectations.

Slowing economy makes space for further easing: The Bank judged another cut was appropriate because prior tightening had continued to slow the economy. Still, the BCB stuck with a gradual 25 basis point move rather than a larger cut, as inflation has stayed above the 4.5% target ceiling through June, inflation expectations for 2026 and 2027 have also outpaced the target, and there is fiscal risk and uncertainty surrounding the Middle East war plus global monetary policy.

Further cuts remain on the table: The BCB provided no explicit forward guidance, reiterating that the size of future cuts will depend on incoming data. While it believes current policy is restrictive enough to bring inflation back toward target, elevated economic uncertainty and fiscal risk call for caution. Still, most of our panelists expect further easing by year-end, while others see rates on hold; our Consensus is for interest rates to end 2026 roughly 20 basis points below current levels. The BCB will reconvene on 15–16 September.

Panelist insight: EIU analysts commented: “The BCB is approaching the end of a brief monetary easing cycle that began in March 2026 as renewed inflationary pressures prompt greater caution. The energy price shock caused by the Iran war, combined with a resilient labour market amid Lula's expansionary fiscal policies, is keeping inflation expectations above the 3% target midpoint through to 2028. The external environment has also become more adverse. […] We expect the BCB to hold rates at [14.00%]—still well above neutral—for the remainder of the year, before resuming a gradual easing cycle in early 2027.”

How should you choose a forecaster if some are too optimistic while others are too pessimistic? FocusEconomics collects Brazilian interest rate projections for the next ten years from a panel of 39 analysts at the leading national, regional and global forecast institutions. These projections are then validated by our in-house team of economists and data analysts and averaged to provide one Consensus Forecast you can rely on for each indicator. By averaging all forecasts, upside and downside forecasting errors tend to cancel each other out, leading to the most reliable interest rate forecast available for Brazilian interest rate.

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