2026.01.2821:38:14UTC+00Brazil Maintains Interest Rate 15%, As Expected

In January, Brazil's central bank decided to keep its benchmark interest rate steady at 15.00%, citing the necessity of a prolonged hold to guide inflation steadily towards the target amidst persistent uncertainty. The central bank highlighted that external influences like U.S. economic conditions and global financial market volatility continue to impact emerging markets. Domestically, economic growth is showing signs of deceleration, despite the labor market's resilience and improvement in inflation rates, which nonetheless remain above target. Inflation expectations are pegged at 4.0% for 2026 and 3.8% for 2027, with the Copom forecasting an inflation rate of 3.2% by the third quarter of 2027. The committee noted potential upward risks from enduring service-sector inflation and a weaker exchange rate. Conversely, downward risks could arise from a more pronounced domestic slowdown or declining commodity prices. The judgment is that sustaining the current rates over an extended period aligns with the strategy of converging inflation to its target while mitigating economic fluctuations.