RatesMarket noteFriday 6 November 2026, 09:10 UTC
Brazil’s interest rate stays at 13.75%: the central bank paused after five cuts as inflation passed its 4.5% ceiling and the real stayed 7.8% weaker.
Brazil’s central bank kept its interest rate at 13.75% on Wednesday, ending a run of five cuts. Its monetary policy committee, the Copom, voted unanimously to hold the Selic, its statement says, and warned of a world that has “become more adverse”. It was the committee’s first meeting since President Luiz Inácio Lula da Silva won a fourth term in the 25 October run-off and the real had its worst day since 2008.
The pause matters for every Brazilian with a loan, as the Selic sets the cost of credit across the economy. The bank had been cutting it at every meeting since March.
The Selic peaked at 15% in June 2025 and stayed there until March 2026. The bank then cut it by a quarter point at each of its next five meetings, to 13.75% on 17 September, its rate series shows. This week it stopped.
The statement gives three reasons, and none of them is good news.
Inflation has gone the wrong way. The headline rate and the average of the core measures both rose in the latest data and are above the upper limit of the target band, the committee said. Consumer prices rose 4.58% in the 12 months to September, official IPCA figures show, against a target of 3% with a ceiling of 4.5%, the central bank’s target page sets out. The committee now expects inflation of 5.6% this year and 4.7% in 2027.
Expectations have drifted. Economists in the bank’s weekly Focus survey now expect inflation of 5.2% for 2026 and 4.8% for 2027, both further from the target than at the September meeting. The committee said it was watching “with attention” the risk that longer-term expectations lose their anchor, which makes it more costly to bring inflation down.
The world is harder. The war in the Middle East has pushed up the price of oil and fuel, and central banks in rich countries are raising rates. The Bank of England did so on Thursday. In that climate, the committee said, emerging markets need caution.
Against that, the economy is slowing more sharply, especially in its more cyclical sectors, and the labour market, though resilient, is cooling at the edges. That is why the bank paused rather than raised.
The election is in the statement too, without being named. Among the risks that could push inflation higher, the committee lists “a persistently more depreciated exchange rate” and economic policies at home with a bigger effect on prices than expected. It also said it was following how fiscal policy affects interest rates and markets.
The real has not recovered. The dollar cost R$5.0377 on 23 October, the last trading day before the run-off, and R$5.4621 on 5 November, the central bank’s PTAX rate shows: the real is still 7.8% weaker. As we reported on 28 October, it fell 8.4% the day after the vote. The committee’s own forecasts assume a rate of R$5.20.
A weaker real makes imports dearer, from fuel to fertiliser, so it feeds straight into the inflation the bank is trying to bring down. That is the link between Brazil’s politics and its interest rate: doubts about policy and public finances show up in the currency, and the currency shows up in prices.
The committee gave no signal of its next move. It said the current Selic is “substantially contractionary” and that the outlook calls for “serenity and caution”, and it will keep policy tight enough to bring inflation back to target. Its forecast for the second quarter of 2028, the horizon it targets, rose to 3.5%.
The next meeting is on 8 and 9 December, the last of the year, B3’s calendar shows. Before then come the October inflation figures. If the real stays weak and expectations keep rising, the question at that meeting may no longer be when to cut, but whether to raise.
This is analysis and opinion, not investment advice.
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CurrenciesMarket noteFriday 6 November 2026, 09:25 UTC
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