Brazil’s National Monetary Council maintains inflation target of 3% by 2026

According to Finance Minister Fernando Haddad, the National Monetary Council (CMN) of Brazil has unanimously decided to maintain the inflation target at 3 percent for 2026, with a tolerance range of 1.5 percent plus or minus.

The CMN also confirmed that the same target and tolerance band will apply for the years 2024 and 2025, as previously established.

As for the functioning of the inflation targeting regime, the CMN decided to make it continuous starting from 2025.

This means that instead of considering the current year from January to December, the target will be defined for a “relevant horizon” without a fixed calendar.

Haddad explained that the “relevant horizon” under the continuous inflation target implies working with a 24-month horizon in practice.

With the decision made on Thursday, the minister stated that there is significant room to begin a cycle of interest rate cuts in August.

The current basic Selic interest rate stands at 13.75 percent per annum, and with a projected inflation rate of 3 percent, consistent rate cuts are expected starting in August.

The CMN, comprising Haddad, Minister of Planning Simone Tebet, and Central Bank President Roberto Campos Neto, holds regular monthly meetings to make monetary policy decisions in Brazil.

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