According to BC president, “conservatism” of the monetary authority in 2025 allows “fat” to analyze the effects
The president of Banco Central, Gabriel Galípolosaid this Thursday (March 26, 2026) that it is necessary to have “time to understand” the impacts of the war in the Middle East on the Brazilian economy and analyze the next steps of monetary policy.
Galípolo stated that the obstruction of the Strait of Hormuz not only causes a logistical impact, but also affects production capacity, the recovery of which takes more time.
The blockade of the — 33 km wide sea route in the Middle East — occurred after the start of the , on February 28.
Galípolo declared, however, that the “conservatism” in the Central Bank’s monetary policy in 2025 left Brazil in a position “better” than it would be without more restrictive interest rates. He said that the country has a “fat” to analyze the consequences and impacts of the conflict.
“I think that the position that the Central Bank is in today, and that Brazil is in, has some benefits arising from being an oil exporter and having a very contractionary interest rate“, he stated. He highlighted, however, the need to pay attention to second-order effects, especially on the resilience of the Brazilian economy.
Galípolo said that the Central Bank will be cautious when signaling the next steps of monetary policy. He did not commit to a drop or maintenance of interest rates and reinforced the need to “time to understand”.
Galípolo commented on the Monetary Policy Report, released this Thursday (26.mar.2026). Here is it (PDF – 3 MB). The Central Bank of Brazil’s GDP (Gross Domestic Product) growth in 2026.
The monetary authority stated that the probability of inflation remaining above the . He also said that the conflicts in the Middle East have increased economic uncertainty and that the prolongation of the war could have an impact, “”, with a possible weakening of activity and an increase in inflation.
The preview of inflation measured by the IPCA-15 (Broad National Consumer Price Index-15) went from 0.84% in February to , but the deceleration was smaller than estimated by economists. The annualized rate —accumulated over 12 months— fell from 4.10% to 3.90%.
The inflation target is 3%, with a tolerance of 1.5 percentage points more or less. The objective will be missed if the IPCA (Broad National Consumer Price Index) falls outside the range of 1.5% to 4.5%.
The Central Bank sets the basic interest rate, the Selic, at 14.75% per year, the main instrument of monetary policy. The minutes of the Copom (Monetary Policy Committee) indicated that these will depend on the duration of the conflict in the Middle East.
The report states that the war makes it difficult to conduct monetary policy, due to secondary effects of the supply shock. Rising inflation expectations, risk premiums and the steepening of the interest curve may indicate the need for “preemptive reaction”, according to the BC.
