Brazil Central Bank Holds Rate at 14.75%
Brazil kept Selic at 14.75% citing persistent inflation.
Brazil's central bank voted unanimously to hold the benchmark Selic rate at 14.75% for the second consecutive meeting, as annual inflation remains stuck at 6.3%, more than double the 3% target. The decision was widely anticipated by markets, but the accompanying statement struck a more hawkish tone than expected, warning that inflationary pressures from food and services remain elevated.
The Brazilian real has weakened nearly 4% against the dollar this month, driven by mounting fiscal concerns after the government announced expanded social spending programs ahead of municipal elections. Foreign reserves have declined to $315 billion from $340 billion at the start of the year, raising questions about the central bank's capacity to defend the currency.
Analysts at Itau Unibanco and Bradesco forecast the Selic will remain above 14% through the end of 2026, with the first cuts unlikely before Q1 2027. The decision contrasts sharply with easing cycles already underway in Chile and Colombia, highlighting divergent monetary paths across Latin America. Brazilian equities fell 0.8% on the day as investors digested the prospect of prolonged high borrowing costs.
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