Brazil’s central bank lowered its benchmark interest rate to 14.50% at its April 29 meeting, in line with market expectations. The Monetary Policy Council highlighted an uncertain external environment driven by geopolitical tensions in the Middle East, which are weighing on global financial conditions. Domestic indicators continue to point to a moderating economic growth trajectory, while the labor market remains resilient.
Both headline and core inflation have accelerated, moving further away from the official target. Inflation expectations for 2026 and 2027 remain above target, at 4.9% and 4.0%, respectively. Inflation risks are assessed as higher than usual, and projections indicate a growing deviation from the target over the policy horizon.
At the same time, uncertainty surrounding these projections has risen significantly, amid limited visibility on the duration of the US–Iran conflict and its potential effects. In this context, the Committee judged it appropriate to proceed with the ongoing monetary policy calibration cycle.
