Central Bank Holds Selic Rate at 13.75% and Ends Cutting Cycle

The Central Bank's Monetary Policy Committee decided to keep the benchmark interest rate at 13.75% per year. This move breaks a streak of five consecutive cuts carried out between March and September. The decision was unanimous and occurred amid increased caution from committee members.

The official statement highlighted that the global landscape has become more challenging due to conflicts in the Middle East and restrictive monetary policy in advanced economies. The impact of these tensions on oil prices and domestic inflationary pressure were decisive factors for the pause. The Central Bank noted that long-term inflation expectations are becoming unanchored.

Data from the Focus report show an increase in projections for the IPCA and for interest rates in the coming years. The committee observed that services inflation remains resilient and the Brazilian labor market continues to be hot. The fiscal scenario of public accounts also remains under constant monitoring by the monetary authority.

The rate hold follows a period of volatility in local financial assets. The Central Bank reinforced the need for serenity in conducting monetary policy to ensure price stability. The authority seeks to balance the slowdown in economic activity with the current inflation target.