The unanimous decision by the monetary authority halted the cycle of increases that had raised rates to their highest level in 19 years in Latin America’s largest economy, in an effort to curb inflation.
The Central Bank explained in a statement that this decision responds to a “more uncertain and adverse” context, mainly due to U.S. trade and fiscal policies.
Additionally, it stated that it monitored “with particular attention” all matters related to the tariff signed today by U.S. President Donald Trump, which included exceptions for sectors such as aviation and certain minerals.
In this context, the Central Bank identified a potential “more pronounced global slowdown resulting from the trade shock” as one of the factors that could reduce inflation.
Domestically, the institution pointed to a moderation in economic growth, although it noted that the labor market still shows dynamism.
This environment, both internationally and domestically, requires a stance of “caution,” according to the Central Bank, which announced that it would not raise the interest rate further for now.
In its previous meeting, held in June, the Central Bank had already reduced the increase magnitude, opting for 0.25 percentage points instead of the previous 0.5.
Inflation in Brazil is at 5.35% annually and, although it has decreased, it remains above the Central Bank’s target ceiling of 4.5%.
