Central Bank holds fire in November

Bank stands pat, as expected: At its meeting on 4–5 November, the Monetary Policy Committee (COPOM) of the Central Bank of Brazil (BCB) held its SELIC rate at 15.00% for the third consecutive meeting—the highest level since July 2006. The decision was once again unanimous, had been priced in by markets, and followed 450 basis points of increases in September 2024–June 2025.

Cautious wait-and-see approach carries on: In justifying the hold, the BCB cited higher-than-usual risks to the economic inflation outlook, particularly arising from conflicts abroad and shifts in the value of the Brazilian real. Moreover, inflation expectations remain above the Central Bank’s 1.5–4.5% target: Those for 2025, 2026, and Q2 2027 were mostly unchanged from those recorded at the prior September meeting at 4.6%, 3.6%, and 3.3%, respectively. Meanwhile, the BCB said that, while economic activity shows signs of decelerating, the labor market continues to exhibit strength, further dissuading a cut.

2026 likely to see various interest rate reductions: Echoing the tone in its prior meeting, the Central Bank said that maintaining the rate at its current level for a “fairly prolonged period” will be enough to guide inflation back to its target. Still, the BCB emphasized its openness to hiking rates further if necessary. Virtually all of our panelists expect the BCB to hold fire again when it reconvenes for the last time this year on 9–10 December. Next year, all of our panelists expect the Bank to begin to reduce rates; our Consensus is for around 275 basis points of cuts in 2026.

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