In May 2025, the Central Bank of Brazil raised its Selic rate by 50 bps to 14.75%. This action aims to curb inflation and enhance price stability while supporting employment. Economic activity shows strength, but inflation remains above the target, with expectations for 2025 and 2026 also higher than desired. The global economic climate adds to the uncertainty, prompting caution from the Central Bank.
The Central Bank of Brazil has decided to raise its Selic rate by 50 basis points, bringing it up to 14.75% as of May 2025. This increase is primarily aimed at controlling inflation and steering it closer to the established target. The bank’s intention is not only focused on price stability but also on minimizing economic fluctuations and promoting full employment throughout the country.
Indicators reflecting economic activity and the labor market continue to demonstrate vigor. However, it is important to note that growth is moderating, and both headline and core inflation are currently exceeding target levels. According to the Focus survey, inflation expectations for 2025 are projected at 5.5% and at 4.5% for 2026, which are still above the anticipated limits.
In summary, the Central Bank of Brazil’s recent decision to increase the Selic rate reflects its commitment to tackling inflation concerns while aiming to stabilize the economy. Despite still dynamic economic conditions, there is a growing awareness of moderating growth and rising inflation expectations. As the external economic landscape remains unpredictable, the bank is poised to adjust its approach as necessary.
Original Source: www.tradingview.com
