Brazil Interest Rate

The Central Bank of Brazil maintained its Selic rate at 10.50% in its July 2024 meeting, aligning with expectations of an extended pause of the rate-cutting cycle amid an uncertain external environment concerning US monetary policy and global inflation dynamics. Despite labor market pressures, domestic economic indicators have demonstrated greater dynamism than anticipated. Current inflation expectations for 2024 and 2025 are approximately 4.1% and 4.0%, respectively, while Copom's projections for early 2026 stand at 3.4% if the Selic rate remains unchanged. The Committee highlighted risks such as unanchored inflation expectations and robust services inflation, alongside potential downside risks from a global economic slowdown. This unanimous decision seeks to preserve price stability and bolster economic activity while committing to monitoring the effects of fiscal policies on monetary policy.