Brazil's central bank cuts Selic rate to 14.75 percent

The Banco Central do Brasil's (BCB) Monetary Policy Committee (Copom) decided to reduce the Selic rate to 14.75% p.a. at its March 2026 meeting.

This marks a calibration of monetary policy, acknowledging evidence of policy transmission on economic activity deceleration.

Consumer inflation, both headline and core, shows some moderation but remains above the 3% target.

The IPCA receded from 4.46% in November to 3.81% in February, while the average of core inflation measures decreased from 4.73% to 4.46%.

Despite these signs, services inflation remains elevated, reflecting a heated labor market and a positive output gap.

The decision aims to ensure inflation converges to the target while also smoothing economic fluctuations and fostering full employment.

The external environment has grown more uncertain since the last report, primarily due to escalating geopolitical conflicts in the Middle East, which have increased volatility in global asset and commodity prices.

Domestically, economic activity continues to moderate, with GDP growing 2.3% in 2025, a slower pace than in previous years.

The labor market remains resilient, with unemployment at a new historical low and real wages expanding.

The BCB's reference scenario projects inflation to rise until late 2026, reaching 3.9%, before resuming a downward trend, yet staying above target.