In accordance with a Reuters poll, the Central Bank of Brazil is anticipated to raise its benchmark interest rate to a near decade-high of 14.25% on March 19, with minimal additional guidance amid a shifting economic landscape. The bank's monetary policy committee, Copom, is expected to increase the Selic rate by 100 basis points, marking the third consecutive hike of that magnitude in the current tightening phase.
Under the leadership of recently appointed governor Gabriel Galipolo, Banco Central do Brasil (BCB) has maintained a firm stance against resurging inflation, alongside a series of government measures to address the issue.
Despite previous clear signals of adjustments, the upcoming policy statement is likely to provide limited insight into future monetary policy decisions, given the increasingly mixed economic indicators.
The Selic rate is projected to rise by one percentage point to 14.25% at the March 19 meeting, the highest level since September 2016, according to all 37 economists surveyed between March 10-13.
Analyst Leonardo Costa of Asa Investments stated, "The central bank will indicate a slower pace of adjustment at the following meeting (in May), without committing to subsequent moves."
Recent data suggest ongoing improvement that is expected to help ease inflation, which stood at 5.06% last month, the highest in over a year.
The unpredictability of U.S. President Donald Trump's tariff policy adds uncertainty not only to monetary matters but also to bilateral relations where the Brazilian government is maintaining a composed stance.
Looking ahead, 20 out of 22 analysts anticipate another rate hike in May following the March decision, indicating a cautious approach to monetary policy. The Selic rate is forecasted to peak at 15.25% in the third quarter before gradually decreasing to 15.00% by the end of 2025 and further to 12.50% by 2026, based on median quarterly estimates in the poll.
Although definitive guidance is not expected on March 19, some analysts foresee a potential reduction in the pace of rate hikes in the future, as noted by economists Gabriel Barros and Johann Soares at ARX Investimentos.