Central Bank of Brazil Cuts Interest Rates to 13.75%

The Central Bank of Brazil lowered the Selic benchmark interest rate from 14% to 13.75%, marking the fifth consecutive cut in a cycle that began in March. This decision aligns with the economic goals of President Luiz Inácio Lula da Silva, who is campaigning for a non-consecutive fourth term in elections starting October 4 against conservative senator Flavio Bolsonaro.

While inflation has fallen within the bank's target of 3% (plus or minus 1.5 points), the bank warned that inflation risks remain "higher than usual" due to oil price spikes linked to the US-Israel war against Iran.

The rate cut occurred as the United States Federal Reserve moved in the opposite direction, raising interest rates by 25 basis points to a range of 3.75% to 4.00%. The Federal Reserve's decision ignored calls from President Donald Trump for rate cuts prior to the November mid-term elections.