Brazil’s Central Bank maintains basic interest rate at 13.75% a year

Despite the economic slowdown and pressure from part of the government, Brazil’s Central Bank has not changed interest rates. The bank’s Monetary Policy Committee (Copom) unanimously decided to maintain the country’s benchmark interest rate—the Selic—at 13.75 percent a year.

In a statement, the committee noted that the international environment has deteriorated since the last meeting, with problems in banks in the United States and Europe and pushing inflation in most countries. In the Brazilian domestic economy, the slowdown continues, with an inflation rate above the target ceiling.

According to the statement, there are uncertainties regarding the future fiscal framework, which is being elaborated by the government. However, the recent policy of partially resuming the taxation of gasoline and ethanol has been praised.

"On the one hand, the recent policy of resuming taxation of fuels reduced the uncertainty of short-term fiscal results. On the other hand, the conjuncture, marked by high volatility in financial markets and unanchored inflation expectations in relation to the targets in longer horizons, demands greater attention in the conduction of monetary policy," the statement reads. "In this scenario, Copom reaffirms it will conduct the monetary policy necessary to meet the targets."

The Selic rate remains at its highest level since January 2017, when it was also at 13.75% a year. This was the fifth consecutive time the Central Bank kept the rate unchanged. It has remained at this level since August last year.