8.45% a year once expected inflation is stripped out: even after this Wednesday's (16) rate cut, Brazil keeps the highest real interest rate in the world among 40 tracked economies, according to a ranking by consultants MoneYou and Lev Intelligence reported by Folha, G1 and InfoMoney. A saver with 10,000 reais invested gains 845 reais above inflation over a year. For borrowers, the effect is the opposite: credit stays expensive.
Copom, the committee that sets the Selic, Brazil's benchmark rate, cut it by a quarter point, from 14% to 13.75% a year, the fifth straight reduction, according to G1. The real rate fell from 9.30% in August's survey to 8.45%, yet Brazil stayed on top of the list, whose average is only 1.62%. Brazilian savers are offered a real return more than five times the group's average.
Russia holds second place at 6.79%, followed by Colombia (6.33%) and Turkey (6.25%), according to Folha. In August, Brazil's lead over Russia was only 0.21 point (9.30% versus 9.09%); now it is 1.66 points. Brazil's official inflation, which ended August at 4.22% over 12 months, means a 100-real grocery basket from a year ago now costs 104.22 reais.
What the real rate means
The real rate shows how much money earns after expected inflation is discounted. The ranking combines inflation projected for the next 12 months, now at 4.71% according to Focus, the central bank's weekly survey of market analysts, with the one-year market interest rate, as Folha explains. In practice, 100 reais invested today would become 108.45 reais of purchasing power a year from now.
Why the top spot did not change
The escalation of the Middle East conflict has pushed oil prices up and led analysts in most countries to raise their inflation forecasts, which lowered real rates worldwide, according to MoneYou's report. Copom cut cautiously despite this risk, which could push fuel prices higher in Brazil, G1 reports. Chief economist Jason Vieira, who coordinates the survey, wrote in a report cited by InfoMoney that even a different Copom decision would not have changed the top of the ranking.
"Inflation expectations for the next 12 months were mostly revised upward across the countries in the ranking, creating a significant series of lower and negative real rates, amid an adverse scenario that remains open with the Middle East conflict", wrote Jason Vieira.
In nominal terms, before inflation is discounted, Brazil slipped from third to fourth place, behind Turkey (37%), Argentina (29%) and Russia (14%). On the same day, the US Federal Reserve raised American rates for the first time since 2023, as InfoMoney reported, while 72.56% of the 164 countries analyzed kept their rates unchanged. For households, the effect is twofold: fixed-income investments still pay well above inflation, while installments and loans remain among the world's most expensive.