What changes in interest rates in 2026? – kudupinter World News Network

The base interest rate of the Brazilian economy remains unchanged since June 2025

Put:
David Valadares

Summary
The Selic has been maintained at 15% since June 2025 and is expected to remain so in the first months of 2026, with possible reductions from March, depending on economic conditions and the evolution of inflation.

Directors of the Central Bank of Brazil.

Photo: Raphaël Ribeiro/Central Bank

The economy’s base interest rate, the Selic, has been stationary at 15% since June 2025 and is expected to remain there during the first months of 2026, according to projections by most financial institutions and market agents. The cycle of budget cuts, initially planned for January, should only begin during the second Copom of the year, scheduled for March 17 and 18.

The change in expectations regarding the start of the Selic’s fall occurred after Central Bank (CB) leaders repeated at the last meeting a signal of high interest rates for a “prolonged” period. In the statement, Copom said that “the current strategy, which consists of maintaining the current level of interest rates for a very long period, is adequate to ensure the convergence of inflation towards the target.”

The inflation target is 3%, with a tolerance margin of 1.5% to 4.5%. However, BC President Gabriel Galípolo has already stated that he is looking for the center and not the ceiling of the goal. In this sense, inflation expectations remain above 3% over the horizon considered. British Columbia forecasts a 3.5% increase in the IPCA in 2026. The market is less optimistic and sees inflation increasing by 4.10%.

The Committee also stressed at the last meeting that it “will not hesitate to resume the adjustment cycle if it deems it appropriate”. According to the Itaú bank, for the forecast of lower interest rates in January to come true, it would be important for Copom to eliminate this part of the resumption of the adjustment cycle. As this did not happen, a January interest rate cut became more unlikely.

“The statement was harsher than expected. Copom members declare that the ‘current’ political strategy is ‘adequate’. This suggests continuity in the future (…). It would be strange if the authorities, who are considering raising interest rates in one meeting, lower them in the next. In short, the statement sets the bar high for a cut in January,” says Itaú.

Everton Gonçalves, director of economics, regulation and products at the Brazilian Association of Banks (ABBC), said that if the reduction does not come in January, it certainly will in March. “The signs of easing are very clear. Inflation is performing well and the Central Bank’s baseline projection is already moving towards the center of the target.”

Although a cut in the Selic in January is practically ruled out, financial market analysts will keep an eye on the adoption of the tone of the next meeting, of flexibility in relation to what is discussed to move towards lowering interest rates.