Brazil Interest Rate

The central bank of Brazil lowered its key Selic rate by 50 bps to 12.75% for the second consecutive meeting in September 2023, as widely expected. The Committee stated that the decision is compatible with the strategy of anchoring inflation around the target over a relevant horizon, while anticipating further cuts of the same magnitude in the next meetings. The Board also mentioned that the pace of rate cuts will be inline with the disinflationary process. The most recent data indicate inflation eased, but are still above the inflation target. Copom's inflation projections in the reference scenario stand at 5.0% for 2023, 3.5% for 2024, and 3.1% for 2025. Meanwhile, the economic activity showed stronger resiliency than previously expected, but the Committee continues to anticipate economic deceleration for the next quarters.