Brazil’s central bank maintained its benchmark rate at 15.00% in January, saying a prolonged hold is needed to keep inflation on a steady path toward the target amid elevated uncertainty. External factors such as US economic conditions and global financial volatility continue to affect emerging markets, while domestically growth is moderating even as the labour market remains resilient and inflation has improved but stays above target. Inflation expectations stand at 4.0% for 2026 and 3.8% for 2027, and Copom projects inflation at 3.2% by the third quarter of 2027. The committee flagged upside risks from persistent services inflation and a weaker exchange rate, and downside risks from a sharper domestic slowdown or falling commodity prices, judging that holding rates for a fairly prolonged period remains consistent with converging inflation to target while smoothing the cycle.
