The Monetary Policy Committee (Copom) of Brazil's Central Bank kept the Selic rate at 15% per year for the fifth consecutive time on January 28, 2026, but signaled it will start cuts at the March meeting if the economic scenario holds. The decision reflects cooling inflation, which ended 2025 at 4.26%, below the target ceiling. Analysts and groups like the CNI see room for easing, but the BC stresses caution amid unanchored expectations and global uncertainties.
In its January 28, 2026 meeting, the Copom of Brazil's Central Bank decided to keep the benchmark Selic rate at 15% per year for the fifth consecutive time, unanimously. In the statement, the committee said: “The Committee foresees, if the expected scenario is confirmed, starting the easing of monetary policy at its next meeting”, scheduled for March 17 and 18. This clear signaling surprised part of the market, which expected maintenance without such explicit hints of imminent cuts.
Inflation accumulated 4.26% in 2025, below the 4.5% target ceiling, and BC projections indicate IPCA of 3.4% for the end of 2026 and 3.2% in the third quarter of 2027, the relevant horizon for monetary policy. However, the Focus Bulletin shows expectations of 4% for 2026 and 3.8% for 2027, deemed unanchored from the 3% target center.
Analysts differ on the size of the first cut: the market median bets on a drop to 12.25% by December 2026, with wagers on 0.25 or 0.50 percentage points in March. José Marcio Camargo of Genial Investimentos highlighted the BC's tonal shift, while Flávio Serrano of Banco Bmg predicts a 0.50 p.p. cut. Caution factors include a heated labor market, with unemployment at 5.2% in the quarter ending November 2025, persistent services inflation, and geopolitical uncertainties, such as U.S. policies under Donald Trump.
The National Confederation of Industry (CNI) criticized the decision, stating the BC ignores inflation's decline and the damage from high Selic to the economy. “The Central Bank should have started the interest rate reduction cycle long ago”, said CNI president Ricardo Alban. The BC emphasized that the pace of cuts will depend on greater confidence in the inflation target, amid high uncertainty.
Internationally, Brazil held second place in real interest rates at 9.23% per year, behind only Russia. The decision sustains the spread with the U.S., where the Fed kept rates between 3.5% and 3.75%.
