Brazil's Central Bank Raises Selic Rate by 1 Percentage Point to 12.25%, Future Increases Anticipated in January and March 2025

Dec 12, 2024, 10:25 AM

Brazil's central bank has raised its key interest rate, known as Selic, by 1 percentage point to 12.25% in an effort to combat rising inflation. This decision was made by the Monetary Policy Committee (Copom) and is expected to have significant implications for businesses, which will face increased challenges in maintaining profitability due to the higher borrowing costs. The central bank's move aligns with broader economic trends, including the recent victory of Donald Trump in the U.S. presidential election, which analysts believe will contribute to sustained high interest rates in Brazil. Furthermore, the Copom has indicated that additional increases of 1 percentage point are anticipated in the upcoming meetings scheduled for January and March 2025. The market is now forecasting the Selic rate could approach 15% in the near future, reflecting the tightening monetary policy environment.