Brazil Keeps Selic at 15% for a Fifth Time, Opening the Door to March Cuts

Key Points

• Copom kept Selic at 15% for the fifth straight meeting, its highest level since mid-2006.
• Inflation is cooling, but expectations remain above target, keeping policy restrictive for now.
• The committee openly pointed to possible cuts in March, if the disinflation path holds.

Brazil’s central bank chose continuity over speed, keeping its benchmark Selic rate at 15% per year after a unanimous Copom vote.

It was the fifth consecutive hold and the tightest setting since 2006, with policymakers arguing that patience still best protects price stability.

The decision was widely expected. One market gauge, B3’s Copom options, pointed to roughly an 81% chance of no change as of January 27.

The message, however, carried a new hinge: the committee said it could begin easing at the next meeting in March, if the expected scenario is confirmed.

Copom framed the moment as a narrow corridor. Domestic activity indicators have been moderating as anticipated, yet the labor market still looks resilient.

Inflation has shown fresh signs of deceleration in headline and underlying measures, but it remains above target measures in key areas. Expectations are the sticking point.

Copom Holds Rates Amid Inflation Risks

Copom highlighted Focus survey medians above target for 2026 and 2027, at 4.0% and 3.8%. It also cited its own projection for the relevant policy horizon, with inflation at 3.2% in the third quarter of 2027.

The committee’s risk map leaned cautious. Upside risks include prolonged unanchoring, stubborn services inflation, and a weaker currency.

Downside risks include a sharper domestic slowdown, a deeper global deceleration tied to trade shocks, and lower commodity prices.

External uncertainty featured prominently. Copom warned that U.S. policy and broader geopolitical tensions can tighten global financial conditions quickly, forcing extra care from emerging markets.

The hold also reflected the long tail of previous tightening. The Selic reached 15% in mid-2025 after roughly 450 basis points of hikes. Brazil closed 2025 with IPCA inflation at 4.26%, inside the 1.5%–4.5% tolerance band around the 3% target.

The vote was cast by seven directors: Gabriel Galípolo, Ailton de Aquino, Gilneu Vivan, Izabela Correa, Nilton Schneider, Paulo Picchetti, and Rodrigo Teixeira.

Two board seats remain vacant, underscoring how much of the strategy now rests on credibility and discipline.

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