Brazil's benchmark interest rate, the Selic, fell to 13.75% a year last week, the fifth straight cut by the Central Bank's rate-setting committee, the Copom, and the minutes released on Tuesday gave no hints about what comes next. For households paying off a car, a mortgage or credit card debt, the message is slow relief: borrowing stays expensive until inflation returns to target. The Central Bank reaffirmed it will run monetary policy with "perseverance, firmness and serenity".

In practice, the committee committed to keeping "adequate restriction", jargon for rates still high enough to cool spending and prices. By not signaling future cuts, the bank left the door open to decide at each meeting as the scenario evolves, and markets now bet on one more cut this year, with the Selic ending 2026 at 13.50%, according to the news outlet G1. The key passage of the minutes reads:

"In the current context of historically high uncertainty, with asymmetric risks to the upside for prices, the Committee reiterates that the magnitude of the calibration cycle [the setting of rates] will be adjusted in light of how the scenario evolves, so as to maintain adequate restriction to ensure the convergence of inflation to the target"

Prices still rise faster than the target

Consumer inflation, measured by the IPCA index, stands at 4.22% in the 12 months through August, according to IBGE data cited by Folha de S.Paulo, helped by a temporary Itaipu bonus that lowered electricity bills. In daily terms, a family spending 500 reais a month on groceries is paying roughly 21 reais more than a year ago. That is more than 40% above the center of the inflation target, set at 3%, though still inside the 4.5% ceiling of the tolerance band.

Explainer: the Selic is the price of money in Brazil's economy, the reference banks use to price loans and financing. Keeping it at 13.75% means every 1,000 reais borrowed at that annual rate costs about 137.50 reais over twelve months, before bank fees and spreads. Rate moves take six to 18 months to fully reach the economy, and the burden falls hardest on poorer households, as G1 notes.

Economy cooling, expectations not

High rates are already braking the economy: GDP grew 0.5% in the second quarter, less than half the 1.1% of the first, dragged down by household consumption, and longer-term bank credit lines have slowed, Folha reports. Even so, inflation projections remain above target at every horizon: markets estimate 4.92% for 2026, 4.3% for 2027 and 3.80% for 2028. The minutes also cite higher oil prices tied to the Middle East conflict: the committee will not react to the first-round effect of the shock, but will respond "with firmness" if second-round effects on prices emerge.

The final message goes to the government: the committee calls for "harmonious fiscal and monetary policies" and warns that expanding subsidized credit and uncertainty over the stabilization of public debt can push up the economy's interest rates. The bank also keeps its "firm conviction that policies must be predictable, credible and countercyclical".