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2026-11-05 08:46:25
[Brazil's Central Bank Presses "Pause Button" on Interest Rate Cuts: Maintains 13.75% Rate, Raises Inflation Expectations] (1) Brazil's central bank on Wednesday kept its benchmark interest rate, Selic, unchanged at 13.75%, ending a series of rate cuts since March; of the 48 economists surveyed, 33 had previously expected rates to remain unchanged. (2) The central bank raised its inflation expectations, stating that the risks to rising prices are tilted to the upside, and removed previous statements about possible future rate cuts. (3) The central bank reiterated that it will keep monetary policy at a "fully restrictive" level to bring inflation back to the target; at the same time, it emphasized that the slowdown in domestic economic activity is more pronounced, and that current interest rates are "very contractionary," requiring policy to remain "calm and cautious." (4) From March to September, Brazil's central bank cut interest rates by a total of 125 basis points; the current annual inflation rate is 4.6%, while the official target is 3%. (5) The central bank raised its 18-month inflation forecast from 3.1% to 3.5%, its 2020 inflation forecast from 5.2% to 5.6%, and its 2027 forecast from 3.9% to 4.7%. (6) William Jackson, an economist at Capital Economics, said that central banks have hinted at the possibility of eventually restarting an easing cycle, but governments need to tighten fiscal policy and lower inflation expectations.
