Brazil halts rate cuts as Selic stays at 13.75% after the election

What happened. Copom, the rate committee of Brazil's central bank, kept the Selic rate at 13.75% a year on November 4. All seven members, led by governor Gabriel Galípolo, voted for it. In a Reuters poll, 33 of 48 economists expected this outcome.

Why it matters. Between March and September the bank cut the rate by a total of 1.25 percentage points. Before the October 25 election, investors priced two more 0.25 point cuts, in November and December. After Lula's runoff win, Reuters says the real had its worst week since the 2008 crisis and stocks their steepest weekly fall since the pandemic.

What the bank says. Inflation forecasts went up: 5.6% for 2026 instead of 5.2%, 4.7% for 2027 instead of 3.9%, and 3.5% at the second quarter of 2028 instead of 3.1%. Market expectations in the Focus survey are 5.2% and 4.8%. The bank sees inflation risks tilted upward. Reasons it names include the long conflict in the Middle East and costly oil, a weaker real and fiscal policy. At the same time the economy is slowing more sharply, and the bank itself calls the rate "substantially contractionary".

The budget. Per Reuters, Brazil's gross debt is approaching 83% of GDP and interest payments over 12 months are about 9% of GDP. Lula has not yet announced his spending plan or his finance minister. Capital Economics economist William Jackson says the bank hinted it could resume cuts, but the government must take real steps to tighten the budget first.

What we do not know. When the bank will start cutting again. What the budget plan for Lula's new term looks like. How the real and bonds react in the coming weeks.

Confirmed facts

• Copom voted unanimously on November 4, 2026 to keep the Selic rate at 13.75% a year.^[1][2]
• Between March and September 2026 the rate was cut by a total of 1.25 percentage points.^[2]
• The IPCA inflation forecast was raised to 5.6% for 2026, 4.7% for 2027 and 3.5% for the second quarter of 2028.^[1][2]
• The previous forecasts were 5.2%, 3.9% and 3.1%.^[2]
• Inflation expectations in the Focus survey for 2026 and 2027 are 5.2% and 4.8%.^[1]
• The bank calls the rate "substantially contractionary" and says policy needs "serenity and caution".^[1][2]
• The statement dropped a reference to likely future rate cuts.^[2]
• Before the October 25 election, investors expected two 0.25 point cuts, in November and December.^[2]
• Annual inflation is 4.6% against a 3% target.^[2]
• Gross debt is near 83% of GDP, and interest payments over 12 months are about 9% of GDP.^[2]

Implications

• ConfirmedRate cuts in Brazil are on pause.
• ConfirmedThe bank sees inflation risks tilted upward.
• Our readingLoans in Brazil will most likely not get cheaper in the coming months. That is our reading.

Still unknown

• When the bank returns to rate cuts
• What the government's budget plan looks like
• How the real and bonds react

Who it affects

Brazil, Latin America, Global. Investors in the real and Brazilian bonds, people with loans in Brazil, readers who follow central banks

Sources

1. Banco Central do Brasil: Copom mantém a taxa Selic em 13,75% a.a. - 282ª reunião - novembro 2026 November 4, 2026 · official
2. Investing.com (Reuters): Brazil's central bank ends run of rate cuts after Lula election win November 4, 2026 · media