Brazil's Central Bank Holds Selic at 13.75%, Pausing Rate Cuts

What the bank decided and why

Brazil's central bank left the benchmark Selic rate unchanged at 13.75% on Wednesday, halting a cutting streak that began in March. The vote aligned with a Bloomberg poll in which 26 of 31 economists foresaw no change, while the remainder looked for a sixth consecutive 0.25-point cut.

Officials argued that staying put fits the goal of guiding inflation to target, but warned the policy setting is now more challenging amid increased uncertainty, rising inflation expectations, and more evident softness in growth. They noted both headline and core inflation have quickened, and said they are closely watching for long run price expectations drifting away from target.

What drove markets and forecasts

Following the Oct. 25 presidential runoff, Brazilian assets slid as investors no longer assumed a leadership transition would impose tighter fiscal rules and speed the move toward the 3% inflation target. President Luiz Inácio Lula da Silva boosted spending during the campaign, and fresh worries over public finances together with a weaker real now risk adding fuel to consumer prices. Despite higher outlays, activity and job generation have lost momentum.

Private forecasters have been rewriting their spreadsheets. In the weekly central bank survey out Tuesday, they pushed inflation projections further above target through 2029. They now expect the Selic at 13.5% next month versus 13.25% before, 12.5% at end 2027 versus 11.75% previously, and an 11% call for 2028 that is one percentage point higher than before.

In markets, small insights can make a big difference for thoughtful investors. We're hosting our first ever investor livestream on 11/17 to show you how to use ChatGPT and Claude to invest like a pro, hosted by Briefs Finance CEO Jaspreet Singh. Save your seat.

The numbers investors will watch

Policymakers lifted the 2027 inflation projection to 4.7% from 3.9%, a level that exceeds their tolerance band. They also set a reference estimate of 3.5% for inflation in 2028's second quarter, calling it the near-term horizon guiding policy.

On growth, the bank highlighted weaker prints across core economic drivers - retail activity, factory output, and formal employment gains - following months of tight policy. "The labor market remains resilient, albeit showing slowdown signs at the margin," they said.

Caio Megale, who serves as chief economist at XP Inc., said the hold is intended to address inflation running above target and rising expectations. "We believe the Selic rate will remain at 13.75% for the foreseeable future - which is particularly short this time around, considering elevated global and local uncertainty." At Banco BMG, chief economist Flávio Serrano remarked, "There shouldn't be a need for a hike," yet warned that continued deterioration in the outlook alongside mounting expectations might force the bank to act.

What this means for your portfolio

The pause breaks a run of five cuts and resets the debate to inflation and fiscal credibility. With private forecasts nudging the path higher into 2027 and 2028, the tug of war is clear: growth is cooling, but the currency hit after the election, stickier inflation expectations, and questions about spending lean the other way. Watch fiscal headlines and inflation prints into Q2 2028 - the current focal point for policymakers - to gauge when cuts could restart or whether holding tight lasts longer.

Learning how new tools sharpen your judgment helps investors stay calmly prepared. On 11/17, our CEO Jaspreet Singh goes live for our first ever investor livestream on how to use ChatGPT and Claude to invest like a pro. Register to join him.