Brazil benchmark interest kept at 13.75% a year

The Monetary Policy Committee of Brazil’s Central Bank, unanimously decided to maintained the country’s benchmark interest rate—the Selic—at 13.75 percent a year.

In a statement, the committee noted that interest rates could remain high for longer than expected and did not rule out the possibility of further increases if inflation fails to move to the center of the target as expected.

“The committee remains vigilant as it considers whether maintaining the basic interest rate for a longer period than in the reference scenario may ensure the convergence of the inflation,” the text reads.

The Selic is still at its highest since January 2017, when it was also at 13.75 percent a year. This is the fourth consecutive time the Central Bank keeps the rate unchanged. It has remained at this level since August 2022.

Inflation

The Selic rate is the Central Bank’s main tool for curbing the country’s inflation, as gauged by consumer price index IPCA. The target for 2023’s IPCA stands at 3.25 percent, with a tolerance interval of 1.5 percentage points up or down.

The indicator closed out 2022 at 5.79 percent—above the 3.5 percent target ceiling, with a tolerance margin of 1.5 percentage points. Since the end of last year, inflation has been on the rise because of the hikes in food prices and the partial reversal of tax breaks on fuel.