Brazil’s Central Bank cuts benchmark interest rate to 14%
The Monetary Policy Committee (Copom) of the Central Bank of Brazil on Wednesday (Aug. 5) cut the Selic rate - the Brazilian economy’s benchmark interest rate - by 0.25 percentage points, from 14.25 percent to 14 percent per year. The decision marks Copom’s fourth consecutive interest rate cut.
The Central Bank uses the Selic rate as a monetary policy tool to slow economic activity and help control inflation.
According to the institution, the latest gradual reduction of 0.25 percentage points is consistent with its strategy of bringing inflation back toward the midpoint of the target range.
The inflation target set by the National Monetary Council (CMN) for the period beginning in January 2025 is 3 percent, with a tolerance band of plus or minus 1.5 percentage points - that is, from 1.5 to 4.5 percent.
“Without compromising its primary objective of ensuring price stability, this decision also helps smooth fluctuations in economic activity and foster full employment,” the bank said in a statement.
Regarding the external environment, the Central Bank once again pointed to uncertainty surrounding armed conflicts in the Middle East and the monetary policies of some advanced economies.
“This scenario calls for caution on the part of emerging economies in an environment marked by rising volatility in asset and commodity prices,” the institution noted.
Regarding the domestic outlook, the bank emphasized that the set of indicators released since the previous meeting suggests “a gradual moderation in economic activity, although it remains resilient, with mixed signals across sectors and a tight labor market.”
From June 2025 to March this year, the Selic rate remained at 15 percent per year, reaching its highest level in nearly 20 years.
The Monetary Policy Committee began cutting interest rates in March amid falling inflation. However, the war in the Middle East, which has pushed up fuel and food prices, is making further rate cuts more difficult.
