Brazil central bank cuts benchmark rate for fifth time in a row
The bank lowered the so-called Selic rate from 14% to 13.75% on the same day the US Federal Reserve raised interest rates for the first time since 2023.
On Wednesday, Brazil's central bank announced a significant cut to its benchmark interest rate for the fifth consecutive time, lowering the Selic rate from 14% to 13.75%. President Luiz Inacio Lula da Silva hopes this move will stimulate the economy ahead of his re-election bid in October. The decision comes just hours after the US Federal Reserve raised interest rates for the first time since 2023, defying President Donald Trump's call for cuts ahead of November's mid-term elections.
This rate reduction is part of a cycle that began in March following nearly two years of consecutive rate hikes. The central bank had warned of higher-than-usual risks to inflation despite inflation falling within its 3% target range plus or minus 1.5 points. The bank's caution is attributed to the spike in oil prices due to the US-Israel war against Iran and uncertainty surrounding the monetary policies of other leading economies.
Lula, seeking a fourth non-consecutive term in the elections starting October 4, has advocated for lower rates to boost growth. Despite inflation easing, many Brazilians feel life has become more expensive, with the price of the popular picanha steak rising by around 10%.
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