The details were outlined in the minutes of the latest Monetary Policy Committee (Copom) meeting, where the Brazilian Central Bank announced a one-point increase in the country’s base interest rate, bringing it to 14.25%. This decision was made to control inflation amid uncertain external conditions.
“Given the continued adverse scenario for inflation convergence, the high uncertainty, and the inherent lags of the ongoing monetary tightening cycle, the committee [Copom] anticipates, should the expected scenario materialize, a smaller adjustment at the next meeting,” the document reads.
“Beyond the next meeting, the Committee reinforces that the total magnitude of the monetary tightening cycle will be dictated by the firm commitment to converging inflation towards the target,” it added.
The Central Bank emphasized that, according to short-term analyses, accumulated inflation over the past twelve months in Brazil will remain above the target ceiling of 3%, with a margin of 1.5 percentage points upward or downward.
Among the factors complicating the scenario for curbing inflation in the South American country, the document cited uncertainty around U.S. trade policy and signs of “incipient moderation” in domestic economic growth.
Inflation in Brazil rose to 5.06% in the twelve months leading up to February, half a point higher than in January, reaching its highest level since September 2023, according to data from the Brazilian Institute of Geography and Statistics (IBGE).
