Brazil central bank raises interest rates to 14.75% in response to inflation concerns

From Yahoo Finance: 2025-05-07 17:54:00

Brazil’s central bank raised interest rates to 14.75%, the highest in nearly 20 years, in a sixth consecutive hike, citing global uncertainties and sticky domestic inflation. Policymakers stress the need for a contractionary monetary policy to bring inflation to target amidst an environment of heightened uncertainty. Chief economist suggests no rate hike in June.

With the Selic rate now at its highest level since 2006, Brazil faces a 5.49% annual inflation rate, well above the 3% target. Policymakers observe growth moderation but stress the need for continued vigilance. The balance of inflation risks is now seen on both sides, with disinflationary risks emerging from falling commodity prices.

Amid global uncertainties and U.S. trade tariffs, Brazil’s central bank emphasizes caution and flexibility in monetary policy decisions. Recent inflation developments and government stimulus measures impact the economic outlook. The central bank lowers its 2025 inflation forecast and projects a 3.6% inflation rate for the fourth quarter of 2026, influenced by current policy decisions.

Read more: Brazil central bank hikes rates to near 20-year high, leaves next steps open