Brazil Central Bank Raises Rate to 15%, Signals Possible Pause

The Central Bank of Brazil hiked its Selic rate by 25bps to 15% at its June meeting in response to persistent inflation and unanchored expectations.

The Board noted that external environment remains highly uncertain, particularly due to US trade and fiscal policies and global asset volatility, which continue to pressure emerging markets.

Domestically, while economic activity and the labor market remain resilient, recent data show headline and core inflation above target, with expectations for 2025 and 2026 also exceeding the goal.

Copom’s projection for 2026 inflation stands at 3.6%, reflecting ongoing inflationary risks, including strong services inflation, policy-driven exchange rate pressures, and unanchored long-term expectations.

The committee signaled this may be the last hike in the current cycle, pending a reassessment of the lagging effects of past tightening.

However, Copom emphasized its readiness to adjust policy further if inflation does not converge toward target.