Brazil's central bank cuts Selic rate to 13.75%

The Central Bank of Brazil reduced the benchmark Selic rate by 0.25 percentage points to 13.75% per year on 16 September. The cut matched market expectations and marks the fifth consecutive meeting in which the monetary authority eased policy at this pace. The decision came on the same day the central bank reported a 0.2% contraction in the Brazilian economy.

Policymakers stated they will keep an adequate level of monetary restriction to ensure inflation converges to the target. The monetary authority left its options open for the upcoming November meeting. It can either pause the easing cycle to evaluate the outlook or maintain cuts at the same 0.25-point pace, amid domestic electoral processes and international uncertainties tied to the war in Iran.

On 15 September, the US Federal Reserve raised its interest rate by 0.25 percentage points under Chair Kevin Warsh. The US rate increase responded to worsening domestic inflation driven by oil prices rising back above 100 dollars per barrel.