Brazil Maintains High Interest Rate at 15%, Standing Out Among Emerging Markets in 2025

Brazil's Central Bank has decided to keep the Selic rate at 15% per year for the fourth consecutive time, reaffirming its stance in a unique position among emerging markets and within the G20. The Monetary Policy Committee (Copom) made the unanimous decision to sustain the current interest rate level, citing significant economic uncertainties that demand caution. This level, unchanged since June after being raised from 10.5% in May last year, marks one of the highest interest rates Brazil has held since July 2006.

In contrast to Brazil's steady high rate, other leading economies among the BRICS and G20 have reduced theirs throughout 2025. India recently cut its rate from 5.50% to 5.25%, Russia trimmed its rate from 17% to 16.50% in October, and China lowered key lending rates to historic lows of 3% for one-year and 3.5% for five-year loans. Within the G20, only Japan and Brazil have maintained high rates without cuts this year. Other emerging economies such as Egypt, South Africa, UAE, and Saudi Arabia also implemented reductions in their reference rates.

Brazil’s choice to hold its interest rate high is in response to ongoing inflationary pressures and a resilient labor market. The Broad Consumer Price Index (IPCA) inflation was 0.18% in November — its lowest level for that month since 2018 — with an annual inflation rate of 4.46%, within the Central Bank's target tolerance of 3% ±1.5%. Despite the progress, inflation expectations remain a challenge, prompting the Bank to keep monetary policy tight.

The Central Bank projects Brazil’s GDP growth in 2025 at 2%, slightly lower than the market's expectation of 2.25%. The high interest rate acts as a tool to contain inflation by making credit more expensive, but at the cost of slowing economic growth. Additionally, a recent policy exempting income tax for individuals earning up to R$5,000 is forecasted to inject R$28 billion into the economy, potentially offering some relief.

Brazil currently holds the second-highest real interest rate in the world, behind only Turkey. This ranking is based on adjusted interest rates that account for inflation effects, with Brazil’s rate remaining significantly elevated relative to global peers. Meanwhile, the United States’ Federal Reserve cut its benchmark rates by 0.25 points to a range of 3.5%-3.75%, highlighting the divergent monetary approaches between the two largest economies.

The Central Bank has not indicated any timetable for future rate cuts, emphasizing the need to maintain the current level for a prolonged period to ensure inflation converges firmly to target. This cautious stance signals that Brazil prioritizes price stability amid economic uncertainties, even as other countries pursue rate reductions.