17.06.202623:18:58UTC+00Brazil Cuts Rates Despite Rising Inflation

Brazil’s central bank lowered its benchmark interest rate by 25 basis points to 14.25% at its June meeting, in line with market expectations and marking a third consecutive quarter-point cut. Policymakers said the move was taken amid heightened uncertainty and is intended to support economic activity while preserving their commitment to price stability.

The bank underscored that inflationary pressures remain persistent, even as energy costs have eased following the interim Iran–US peace agreement. Annual inflation rose to 4.72% in May, staying above the target range, and inflation expectations for 2026 and 2027 remained elevated at 5.3% and 4.1%, respectively.

At the same time, domestic economic activity has proven resilient, supported by a robust labor market. GDP expanded 1.1% in the first quarter, and the central bank’s economic activity index climbed 0.51% in April. The Copom stressed that inflation risks remain elevated and reiterated that future policy decisions will be guided by incoming economic data.