BC (Central Bank) and Fed (Federal Reserve) decide this Wednesday (29) the direction of interest rates in Brazil and the United States, amid uncertainty with the war in the Middle East.
The market’s expectation is for North American interest rates to remain at a level of 3.5% and 3.75%. While in Brazil, projections indicate that Selic could be cut by 0.25, lowering interest rates to 14.5%.
However, this cut would be milder than initially expected before the intensification of the conflict in the Middle East.
Expectations for Brazil
In the domestic scenario, the expectation of most of the market before the start of the war was a cut of 0.5 percentage points. Now, according to the latest Focus Bulletin released by the Central Bank, the market expects a cut of 0.25 percentage points.
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For experts, in 2026, and increase to 3.4% in the relevant horizon — a future period that the BC takes as a reference for its monetary policy decisions.
Despite expectations of an increase in inflation, the president of the BC, Gabriel Galípolo, had already stated that the BC’s decision to maintain a conservative stance in conducting monetary policy placed Brazil in a more comfortable position to deal with the effects of the war on the indicator.
However, the National Treasury recently stated that the intensification of geopolitical tensions in the Middle East in March increased risk aversion in the markets, while the rise in oil prices “reinforced expectations of maintaining high interest rates in the main economies”, with future interest rates showing an increase in Brazil.
Scenario in the USA
In the United States, experts point out that inflation remains tight, and the effects of the war in the Middle East only put more pressure on the Fed.
The annual inflation rate in the North American country jumped to 3.3% in March 2026, the highest level since May 2024, driven by rising energy and gasoline costs.
There is also a political component in the case of the USA, as this should be Jerome Powell’s last meeting as head of the Fed.
The current chairman of the US central bank was appointed by Donald Trump in his first term, and was kept in charge by Democrat Joe Biden.
But the moment is one of pressure: Trump has been attacking the Federal Reserve for maintaining a restrictive monetary policy, while his nominee to take Powell’s post is expected to take over soon.
But the war scenario has even made critics of high interest rates rethink the Fed’s stance, such as US Treasury Secretary Scott Bessent, who argued that the Federal Reserve should “wait” before reducing interest rates as the conflict continues.
*With information from João Nakamura
