1. The global environment remains adverse and volatile, with downward revisions on prospective global growth. The tightening of the financial conditions in major economies, the persistence of the war in Ukraine with its consequences on energy supply to Europe, and the continuation of the Covid-19 policy in China reinforce a prospect of a slowdown in global growth in the coming quarters.
2. The inflationary environment remains challenging. There is an incipient normalization in supply chains and an accommodation in the prices of major commodities in the recent period, which should lead to a moderation in global goods-related inflationary pressures. In turn, the low level of labor market slack in some economies, coupled with high current inflation and a high degree of diffusion, suggests that inflationary pressures on the services sector may last longer.
3. The process of normalization of monetary policy in advanced economies continues towards contractionary rates synchronized across countries, tightening financial conditions, impacting economic growth expectations, and raising the risk of abrupt repricing movements in the markets. The Committee noted a stronger market sensitivity to fiscal fundamentals, including in advanced economies. This greater sensitivity, concomitant with tightening financial conditions, requires more attention from developing economies. The Committee continues to monitor the risks related to the global slowdown and the increase in risk aversion in a highly pressured inflationary environment.
4. Turning to the Brazilian economy, the set of indicators released since the previous Copom meeting continues to signal growth, albeit at a more moderate rate. The labor market continues to recover, but at a slower pace than in previous months.
5. Despite the recent reduction, driven by items which are more volatile and affected by tax measures, consumer inflation remains high. The recent releases have been strongly influenced by the reduction in administered prices, due to both the decrease in taxes and, to a lesser extent, the drop in international fuel prices. In addition, items related to industrial goods, reflecting the more intense decrease in producer prices and the reduction of pressures in global value chains, also showed deceleration. However, the inflation of the components more sensitive to the economic cycle and the monetary policy, which present greater inflationary inertia, remain above the range compatible with meeting the inflation target. Inflation expectations for 2022, 2023, and 2024 collected by the Focus survey are around 5.6%, 4.9%, and 3.5%, respectively.
6. In the reference scenario, the interest rate path is extracted from the Focus survey, and the exchange rate starts at USD/BRL 5.252 and evolves according to the purchasing power parity (PPP). The Committee assumes that oil prices follow approximately the futures market curve for the following six months and then start increasing 2% per year onwards. Moreover, the energy flag is assumed to be “green” in December 2022, and “yellow” in December 2023 and 2024. In this scenario, Copom’s inflation projections stand at 5.8% for 2022, 4.8% for 2023, and 2.9% for 2024. Inflation projections for administered prices are -3.9% for 2022, 9.4% for 2023, and 3.8% for 2024. The Committee decided again to emphasize the six-quarter-ahead horizon, which reflects the relevant horizon, mitigates the primary effects from the tax changes but incorporates their second-round effects. On this horizon, which refers to the second quarter of 2024, the 12-month inflation projection stands at 3.2%. The Committee judges that the uncertainty in its assumptions and projections is higher than usual.
7. The Committee still considers that the commitment and determination of central banks to reduce inflationary pressures and anchor expectations raise the risk of a more pronounced global slowdown. There has been an adjustment in the extent and speed of the monetary policy tightening cycle in some advanced countries, which has led to a further tightening of financial conditions.
8. The Committee noted a stronger market sensitivity to developments affecting the fiscal fundamentals, including in advanced economies. The combination of higher interest rates and sovereign debts at historically high levels, raises questions about the sustainability of public debt in several countries. Besides, the lower liquidity of the sovereign securities markets increases risk perception and demand monitoring.
9. Data on economic activity, which contribute to the assessment of the degree of slack, point to a more moderate pace of growth recently. On the one hand, the momentum of the reopening of the economy in the services sector and the fiscal stimuli are still driving consumption growth, although these impulses should slow down. On the other hand, the impact of monetary policy and its lags point to a reduction in the pace of economic activity, which tends to worsen in the coming quarters.
10. The Committee discussed the already noticeable impacts of monetary policy on credit and economic activity data. One can notice an impact in recent data regarding both the composition of new household credit operations and the moderate increase in the delinquency rate, partly related to the behavior of the real disposable income, which suggests some reduction. The Committee observed that an additional challenge for the proper assessment of the dynamics of activity at the margin is in the seasonal adjustment of the series, especially of the indicators with a shorter sample period, due to the pandemic period. Exercises show a high sensitivity of the signal and the magnitude of the seasonally adjusted results to small changes in the samples and methods used.
11. In the domestic scenario, Copom believes that the permanent increase in spending and the uncertainty about its trajectory from next year on may increase the country's risk premia and inflation expectations as they put pressure on aggregate demand and worsen the fiscal path expectations. The Committee reiterates that there are several channels by which fiscal policy may affect inflation, including its effect on activity, asset prices, degree of uncertainty in the economy, and inflation expectations.
12. The Committee emphasizes that risks to its scenarios remain in both directions. Among the upside risks for the inflationary scenario and inflation expectations, it should be emphasized (i) a greater persistence of global inflationary pressures; (ii) the uncertainty about the country's future fiscal framework and additional fiscal stimuli that support aggregate demand, partially incorporated in inflation expectations and asset prices; and (iii) an output gap tighter than the currently adopted by the Committee in its reference scenario, especially in the labor market. Among the downside risks, it should be noted (i) an additional reduction in the prices of international commodities measured in local currency; (ii) a greater than projected deceleration of global economic activity; and (iii) the continuity of tax cuts assumed to be reversed in 2023. The Committee assesses that the still uncertain and volatile current scenario requires serenity when evaluating risks.
13. Copom discussed the conduct of monetary policy, considering the set of projections evaluated, as well as the balance of risks for inflation.
14. The 12-month inflation projection for the second quarter of 2024, in the scenario using the interest rate trajectory extracted from the Focus survey, remains consistent with the strategy of inflation convergence to around the target over the relevant horizon. The Committee decided again to emphasize the six-quarter-ahead horizon for its projections, and stresses that this decision is conditional on the temporary nature of the taxes. Moreover, the Committee continues to consider that inflation projection for 2024 is also around the target. This assessment reflects the lower-than-normal visibility of the forward-looking scenario, which increases the uncertainty of the point projections communicated by the Committee over longer horizons.
15. Copom anticipates that, if the alternative scenario of maintaining tax exemption on fuels in 2023 materializes, it will again emphasize usual horizons that include the first quarter of 2023. However, it assesses that there will be no relevant impacts on the conduct of monetary policy since the primary effects of such measures are already being disregarded.
16. Copom began by discussing the evolution of the broad array of data monitored, the projections, inflation expectations, and the balance of risks. Inflation projections showed a slight increase at longer horizons, reflecting upward revisions for inflation of market prices in the short term and a small increase in the projection for administered prices. The Committee assesses that the projections remain at values consistent with the strategy of reaching a level around the target over the relevant horizon. Inflation expectations from the Focus survey showed a more pronounced drop at shorter horizons but remains relatively stable for longer ones. Risks remain high, requiring continuous monitoring and serenity in their assessment. Regarding the degree of slack in the domestic economy, the Committee continues to monitor different metrics and strategies for the assessment of the output gap, as well as for current and prospective activity, and considers that there has been some decrease in the estimated slack since its latest update. Copom reinforces that its projection incorporates an increase in slack throughout the monetary policy horizon, as a result of the monetary adjustment undertaken in recent quarters. Finally, the Committee is following with special attention the evolution of services inflation, which depends on both inflationary inertia and the output gap, and whose trajectory will become clearer over time.
17. Copom chose to maintain the interest rate, reinforcing the need to evaluate, over time, the accumulated impacts to be observed of the intense and timely monetary policy cycle already undertaken. Therefore, the Committee members assessed that, given the data released, projections, inflation expectations, the balance of risks, and the lags of the effects of the monetary policy already in significantly contractionary territory, it was appropriate to maintain the interest rate at 13.75% p.a. The Committee reinforced that it is necessary to remain vigilant, assessing if the strategy of maintaining the Selic rate for a sufficiently long period will be enough to ensure the convergence of inflation.
18. The Committee emphasizes that it will persist until the disinflationary process consolidates and inflation expectations anchor around its targets. The Committee emphasizes that it will not hesitate to resume the tightening cycle if the disinflationary process does not proceed as expected.
19. Considering the assessed scenarios, the balance of risks, and the broad array of available information, the Copom decided to maintain the Selic rate at 13.75% p.a. The Committee judges that this decision reflects the uncertainty around its scenarios for prospective inflation, an even higher-than-usual variance in the balance of risks, and is consistent with the strategy for inflation convergence to a level around its target throughout the relevant horizon for monetary policy, which includes 2023 and 2024. Without compromising its fundamental objective of ensuring price stability, this decision also implies smoothing of economic fluctuations and fosters full employment.
20. The Committee will remain vigilant, assessing if the strategy of maintaining the Selic rate for a sufficiently long period will be enough to ensure the convergence of inflation. The Committee emphasizes that it will persist until the disinflationary process consolidates and inflation expectations anchor around its targets. The Committee reinforces that future monetary policy steps can be adjusted and will not hesitate to resume the tightening cycle if the disinflationary process does not proceed as expected.
21. The following members of the Committee voted for this decision: Roberto de Oliveira Campos Neto (Governor), Bruno Serra Fernandes, Carolina de Assis Barros, Diogo Abry Guillen, Fernanda Magalhães Rumenos Guardado, Maurício Costa de Moura, Otávio Ribeiro Damaso, Paulo Sérgio Neves de Souza, and Renato Dias de Brito Gomes.


1. Regarding the global outlook, fiscal and monetary stimuli in some developed countries promote a robust economic recovery. Due to economic slack, central bank communication from major economies suggests monetary stimuli will last long. However, uncertainty remains high and a new round of market discussion regarding inflationary risks in these economies could result in a challenging environment for emerging economies.
2. Turning to the Brazilian economy, despite the intensity of the second wave of the pandemic, recent indicators continue to evolve better than expected, implying relevant revisions in growth forecasts. Risks to economic recovery were significantly reduced.
3. The various measures of underlying inflation are above the range compatible with meeting the inflation target.
4. Inflation expectations for 2021, 2022, and 2023 collected by the Focus survey are around 5.8%, 3.8%, and 3.25%, respectively.
5. The persistence of inflationary pressure was more intense than expected, especially in industrial goods. Additionally, the slow pace of supply normalization, the resilience of demand and implications of the energy scenario deterioration over electricity fares contribute to keeping inflation under pressure in the short run, despite the Brazilian real (BRL) recent appreciation. The Committee continues to closely monitor the evolution of shocks and their possible second-round effects, as well as the behavior of service prices as the immunization effects over the economy become more relevant.
6. The Copom's inflation projections in its baseline scenario, with interest rate path extracted from the Focus survey and exchange rate starting at USD/BRL 5.052 and evolving according to the purchase power parity (PPP), stand around 5.8% for 2021 and 3.5% for 2022. This scenario assumes a path for the Selic rate that ends 2021 at 6.25% p.a. and rises to 6.50% p.a. in 2022. In this scenario, inflation projections for administered prices are 9.7% for 2021 and 5.1% for 2022. The energy flag is assumed to be neutral, remaining at "red level 1" in December each year.
7. The Copom’s baseline scenario for inflation encompasses risk factors in both directions.
8. On the one hand, a possible reversion, even if partial, of the recent increase in the price of international commodities measured in local currency would produce a lower-than-projected inflation in the baseline scenario.
9. On the other hand, further extensions of fiscal policy responses to the pandemic that increase aggregate demand and deteriorate the fiscal path may pressure the country's risk premium. Despite the improvement of debt sustainability indicators, the elevated fiscal risk creates an upward asymmetry in the balance of risks,i.e., in the direction of higher-than-expected paths for inflation over the relevant horizon for monetary policy.
10. Regarding the international outlook, the Committee assessed that the fiscal and monetary stimuli are promoting robust economic growth and that the latest inflation releases were surprising in several countries, both developed and emerging. For the Committee, further discussions about the risk of permanent increase in inflation in the United States could result in a challenging environment for emerging economies. The Copom noted that inflation of tradable goods in Brazil was higher than in several of its peer countries and that this process may reverse in the future, creating a new downside risk to inflation. The recent rise in the weight of tradable items in the inflation index should increase the relevance of this event.
11. The Copom members discussed the evolution of domestic economic activity in light of the available information and indicators. They considered that despite the intensity of the second wave of the pandemic, the latest available data have surprised positively. The duration of the problems of the supply chains were also discussed. For the Committee, the second half of the year should bring a robust recovery, as the effects of the vaccination are felt more broadly. The Committee noted that median Focus survey growth projections were significantly revised and became more optimistic than those in its baseline scenario. The Committee also assessed that the downside risks to inflation stemming from risks to the economic recovery have reduced significantly.
12. The Copom members then debated the level of economic slack. Although the economic slack as a whole is rapidly returning to the late 2019 level, the Committee considered that the pandemic is still producing heterogeneous effects across economic sectors, with consequences for recent and prospective inflation dynamics. The Copom judges that economic activity and formal labor market data suggest that the overall slack has declined faster than anticipated, despite the increase in the unemployment rate.
13. Next, the Copom discussed the implementation of monetary policy, considering not only the baseline scenario, but also the balance of risks for inflation. According to the baseline scenario, which uses the interest rate path extracted from the Focus survey, inflation projections are in line with the target for 2022. The Committee judged that despite the more positive recent evolution, fiscal risks continue implying an upward bias in the projections. This asymmetry in the balance of risks affects the appropriate degree of monetary stimulus, thus justifying a path for monetary policy that is less stimulative than the path used in the baseline scenario.
14. The Copom then evaluated different normalization paths for the Selic rate. Considering the baseline scenario and the balance of risks, the Committee assessed that –should there be no changes in the inflation conditioning factors– subsequent uninterrupted interest rate increases, up to the level considered neutral, imply projections around the inflation target in the relevant horizon. Therefore, a normalization of the interest rate to this level has become appropriate. The Committee decided to communicate this decision, maintaining transparency about the monetary policy path implied in its projections, and reaffirming that this view will be systematically reassessed as changes in inflation determinants or in the balance of risks occur.
15. In light of the revision of the monetary policy path implied in its projections, the Committee evaluated a quicker reduction of monetary stimulus already on this meeting. Considering the various alternative scenarios, the Committee decided that the best strategy would be to maintain the current pace of stimulus reduction but highlighting the possibility of a quicker adjustment in the next meeting. In the Committee's view, this strategy has the following two advantages.
16. First, to accumulate more information regarding the traditional determinants of inflation and, in particular, some of its qualitative aspects: (i) the evolution of more inertial prices, as the services sector recovers, and (ii) the behavior of inflation expectations, both from the Focus survey and from market prices.
17. Second, to clarify the distinction between transparency about conditional projections and invariant monetary policy intentions. The unequivocal commitment of the Banco Central do Brasil is to inflation convergence to its target over the relevant horizon, and future monetary policy steps are freely adjusted to this objective as new information becomes available. Thus, indications about the future path of interest rates, whether for the next meeting or for the final level, are useful elements for understanding the response function of monetary policy. The information obtained in the period between Copom meetings modifies the assumptions present in the baseline scenario and in the balance of risks, and naturally changes the future path of interest rates.
18. Taking into account the baseline scenario, the balance of risks, and the broad array of available information, the Copom unanimously decided to increase the Selic rate by 0.75 p.p. to 4.25% p.a. The Committee judges that this decision reflects its baseline scenario for prospective inflation, a higher-than-usual variance in the balance of risks, and it is consistent with convergence of inflation to its target over the relevant horizon for monetary policy, which includes 2022. Without compromising its fundamental objective of ensuring price stability, this decision also implies smoothing of economic fluctuations and fosters full employment.
19. At this moment, the Copom's baseline scenario indicates, as appropriate, a normalization of the policy rate to a level considered neutral. This adjustment is necessary to mitigate the dissemination of the temporary shocks to inflation. However, the Committee again emphasizes that there is no commitment with this plan, and that future steps of monetary policy could be adjusted to assure the achievement of the inflation target.
20. For the next meeting, the Committee foresees the continuation of the monetary normalization process with another adjustment of the same magnitude. However, a deterioration of inflation expectations for the relevant horizon may require a quicker reduction of the monetary stimulus. The Copom emphasizes that its view will also depend on the evolution of economic activity, the balance of risks, and how these factors affect inflation projections.
21. The following members of the Committee voted for this decision: Roberto Oliveira Campos Neto (Governor), Bruno Serra Fernandes, Carolina de Assis Barros, Fabio Kanczuk, João Manoel Pinho de Mello, Maurício Costa de Moura, Otávio Ribeiro Damaso, and Paulo Sérgio Neves de Souza.


1. Regarding the global outlook, the environment has deteriorated significantly. The conflict between Russia and Ukraine has led to a strong tightening in financial conditions and higher uncertainty surrounding the global economic outlook. In particular, the supply shock resulting from the conflict has the potential of increasing inflationary pressures, which had already been rising both in emerging and advanced economies. Since the previous meeting, most commodities have registered strong price increases, particularly the energy ones.
2. The reorganization of global production chains, with the creation of redundancies in production and the supply of inputs, as well as changes in the management of inventories of goods (in the sense of an increased level of inventories), was further propelled by the conflict in Europe and sanctions imposed to Russia. In Copom’s view, these developments might have long-term consequences and lead to more persistent inflationary pressures on global goods’ production.
3. Turning to the Brazilian economy, GDP growth in 2021Q4 came in higher than expected, producing a slightly larger statistical carry-over effect for 2022. In January, retail and services indicators evolved slightly better than expected, while industrial activity fell on the month. Labor market indicators continued to show consistent job recovery in 2021Q4 and January 2022.
4. For 2022, if, on the one hand, the rise in risk premia and the more intense tightening of financial conditions act to slow economic activity, on the other hand, Copom still considers that economic growth tends to benefit from the performance of agriculture and livestock, albeit with lower volumes than projected in the previous meeting, and from the remaining effects of the normalization process of the economy, particularly in the services sector and in the labor market.
5. Consumer inflation remains high, with increases spread among several components, and continues to be more persistent than anticipated. The increase of industrial prices has not slowed down and should persist in the short term, while services inflation accelerated even further. Recent readings were higher than expected and the surprise came in both the more volatile components and on items associated with core inflation.
6. The various measures of underlying inflation are above the range compatible with meeting the inflation target. Inflation expectations for 2022 and 2023 collected by the Focus survey are around 6.4% and 3.7%, respectively.
7. The Copom's inflation projections in its reference scenario, with interest rate path extracted from the Focus survey and exchange rate starting at USD/BRL 5.052 and evolving according to the purchasing power parity (PPP), stand around 7.1% for 2022 and 3.4% for 2023. This scenario assumes a path for the Selic rate that rises to 12.75% in 2022 and declines to 8.75% during 2023. In this scenario, inflation projections for administered prices are 9.5% for 2022 and 5.9% for 2023. The energy flag is assumed to be “yellow” in December of 2022 and 2023.
8. Given the recent volatility and the impact on its inflation projections due to the usual assumption for the oil price in USD3, the Committee has also decided to adopt, at this moment, an alternative scenario. This scenario, considered of higher probability, assumes that oil prices follow approximately the futures market curve until the end of 2022, ending the year at USD 100/barrel, and then start increasing 2% per year in January 2023. In this scenario, Copom’s inflation projections stand at 6.3% for 2022 and 3.1% for 2023.
9. The Copom’s scenarios for inflation encompass risk factors in both directions.
10. On the one hand, a possible reversion, even if partial, of the increase in the prices of international commodities measured in local currency would produce a lower-than-projected inflation in its scenarios.
11. On the other hand, fiscal policies that imply additional impulses to aggregate demand or deteriorate the future fiscal path may have a negative impact on prices of important financial assets as well as pressure the country’s risk premia.
12. In spite of the more favorable public accounts data, the Committee assesses that the uncertainties regarding the fiscal framework maintain elevated the risk of deanchoring inflation expectations but considers that this risk is being partially incorporated in the inflation expectations and asset prices used in its models. The Committee maintains the assessment of an upward asymmetry in the balance of risks.
13. Uncertainties regarding the future of the current fiscal framework result in increased risk premia and raise the risk of deanchoring inflation expectations. This implies assigning greater probability to alternative scenarios that consider higher neutral interest rates. This movement is already seen, to some extent, in the longer-term inflation expectations extracted from the Focus survey, as well as in the risk premia of several domestic assets. The Committee reiterates that the process of reforms and necessary adjustments in the Brazilian economy is essential for sustainable economic growth. Weaknesses in the structural reform effort and permanent changes to the fiscal consolidation process could result in an increase in the structural interest rate.
14. The conflict in Europe adds further uncertainty and volatility to the prospective scenario and imposes a relevant supply shock in several commodities. The Committee considered that the best practice recommends that monetary policy react to the second-round effects of this type of shock, as this practice takes into account the usual lags in the effects of monetary policy.
15. Copom specifically evaluated the impact on its projections of the assumption for the path of oil prices. In its usual hypothesis, the price per barrel starts from values around USD 118 in March and rises to around USD 121 by the end of 2023, i.e., extrapolating for the entire relevant horizon of monetary policy the oil price resulting from a particularly unusual global situation. The Committee noted that the current environment of high uncertainty and volatility demands serenity for the evaluation of the long-term impacts of the current shock, and therefore, decided to compare this assumption with the prices of oil future contracts negotiated in international markets as well as projections from the energy sector's agencies. The Committee observed that both converged to a price per barrel below USD 100 by the end of 2022. Copom then concluded that it would be appropriate to keep the usual assumption in the reference scenario, but to assume as more likely a scenario with an alternative assumption for the path of oil prices until the end of 2022. As of 2023, the Committee decided to stick to its more conservative assumptions. The Committee considers that the disclosure of an alternative scenario is particularly useful and informative in a highly uncertain environment.
16. Next, Copom discussed the implementation of monetary policy, considering the relative probabilities of the scenarios evaluated, as well as the balance of risks for inflation. Considering the greater weight assigned to the scenario with an alternative assumption for oil, the inflation projections are above the upper limit of the target tolerance band for 2022, and around the target for 2023.
17. As for the balance of risks, the Committee maintains the upward bias for the projections of its scenarios. Hence, considering this bias due to asymmetric risks, Copom evaluated that its projections are above the upper limit of the target tolerance band for 2022 and still around the target for 2023. Considering these results and the Committee's evaluation regarding the probability of each scenario, Copom considered that, at this moment, a monetary tightening cycle similar to the one used in its scenarios is the most adequate.
18. The increase of at least 0.75 p.p. in the projected interest rate cycle over the entire relevant horizon, since the previous Copom meeting, weighed in the Committee's assessment. The projected interest rate path implies a significantly restrictive monetary policy stance, which will mainly impact inflation for 2023, and is compatible with tackling second-round effects of the current supply shock. However, should the prospective scenario prove to be closer to that observed in the reference scenario, the Committee believes that this cycle should be even more restrictive.
19. Next, Copom assessed the appropriate pace of interest rate hikes. For such, it analyzed its inflation projections using simulations with monetary policy paths with different terminal rates, adjustment paces, and duration of monetary tightening. Given the volatility and uncertainty of the current environment, particularly in the global scenario, the Committee opted for a timelier interest rate trajectory than that embedded in its scenarios. This preference expresses caution regarding the probabilities awarded to its scenarios and the measurement of second-round effects, as well as its commitment to the convergence of inflation and expectations to its targets over the relevant horizon.
20. Based on these results, Copom members discussed the most appropriate strategy. The Committee concluded that a further adjustment of 1.00 percentage point, followed by an additional adjustment at the same pace, is the most appropriate strategy to achieve sufficient monetary tightening and to ensure inflation convergence over the relevant horizon, as well as the anchoring of long-term expectations. However, the Committee recognizes the challenging scenario for the convergence of inflation to its targets and reinforces that it will be ready to adjust the size of the monetary tightening cycle, should the scenario evolve unfavorably.
21. Taking into account the assessed scenarios, the balance of risks, and the broad array of available information, the Copom unanimously decided to increase the Selic rate by 1.00 p.p. to 11.75% p.a. The Committee judges that this decision reflects the uncertainty around its scenarios for prospective inflation, an even higher-than-usual variance in the balance of risks and is consistent with the convergence of inflation to its target throughout the relevant horizon for monetary policy, which includes 2022 and, mainly, 2023. Without compromising its fundamental objective of ensuring price stability, this decision also implies smoothing of economic fluctuations and fosters full employment.
22. The Committee considers that, given its inflation projections and the risk of a deanchoring of long-term expectations, it is appropriate to continue advancing in the process of monetary tightening significantly into an even more restrictive territory.
23. The Committee’s actions aim at curbing the second-round effects of the current supply shock in several commodities, which appear in inflation in a lagged manner. The current projections indicate that the interest rate cycle in its scenarios is sufficient for inflation convergence to levels around the target over the relevant horizon. The Copom judges that the moment requires serenity to assess the size and duration of the current shocks. If those shocks prove to be more persistent or larger than anticipated, the Committee will be ready to adjust the size of the monetary tightening cycle. The Committee emphasizes that it will persist in its strategy until the disinflation process and the expectation anchoring around its targets consolidate.
24. For the next meeting, the Committee foresees another adjustment of the same magnitude. The Copom emphasizes that its future policy steps could be adjusted to ensure the convergence of inflation towards its targets and will depend on the evolution of economic activity, on the balance of risks, and on inflation expectations and projections for the relevant horizon for monetary policy.
25. The following members of the Committee voted for this decision: Roberto Oliveira Campos Neto (Governor), Bruno Serra Fernandes, Carolina de Assis Barros, Fernanda Magalhães Rumenos Guardado, Maurício Costa de Moura, Otávio Ribeiro Damaso, and Paulo Sérgio Neves de Souza.


1. The global environment remains adverse and volatile, with continued downward revisions on prospective growth in the major economies, especially in China. The data released since the previous Copom meeting reinforce the view that the U.S. labor market, as well as in other advanced economies, remains heated. However, the reversal of countercyclical policies in major economies, the persistence of the war in Ukraine with its consequences on natural gas supplies to Europe, and the continuation of the Covid-19 policy in China reinforce a prospect of a slowdown in global growth in the coming quarters.
2. The inflationary environment remains challenging. There is an incipient normalization in supply chains and an accommodation in the prices of major commodities in the recent period, which should lead to a moderation in global goods-related inflationary pressures. On the other hand, the low degree of slack in the labor market in these economies suggests that inflationary pressures in the sector of services might take long to dissipate.
3. The process of normalization of monetary policy in advanced economies continues towards contractionary rates in a synchronized way across countries, impacting economic growth expectations, and raising the risk of abrupt repricing movements in the markets. The Committee continues to monitor the risks related to the global slowdown and the increase in risk aversion in a highly pressured inflationary environment.
4. As for the domestic outlook, second quarter GDP came stronger than expected. Robust growth was observed in both consumption and investment. Moreover, the set of indicators released since the previous Copom meeting still suggests that the economy kept growing at the margin, albeit more moderately. Besides, the labor market continued to expand, although not completely reverting the real income decline observed in recent quarters.
5. Despite the recent reduction in prices of more volatile items and the impacts of tax measures, consumer inflation remains high. The recent releases have been strongly influenced by the reduction in administered prices, due to both the decrease in taxes and, to a lesser extent, the drop in international fuel prices. In addition, items related to industrial goods, reflecting the decrease in producer prices and the reduction of pressures in global value chains, also showed an incipient decline. However, the inflation of the components more sensitive to the economic cycle and the monetary policy, which present greater inflationary inertia, remain above the range compatible with meeting the inflation target. Inflation expectations for 2022, 2023, and 2024 collected by the Focus survey are around 6.0%, 5.0%, and 3.5%, respectively.
6. In the reference scenario, the interest rate path is extracted from the Focus survey, and the exchange rate starts at USD/BRL 5.202 and evolves according to the purchasing power parity (PPP). The Committee assumes that oil prices follow approximately the futures market curve for the following six months and then start increasing 2% per year onwards. Moreover, the energy flag is assumed to be “green” in December 2022, and “yellow” in December 2023 and 2024. In this scenario, Copom’s inflation projections stand at 5.8% for 2022, 4.6% for 2023, and 2.8% for 2024. Inflation projections for administered prices are -4.0% for 2022, 9.3% for 2023, and 3.7% for 2024. The Committee decided again to emphasize the six-quarter-ahead horizon, which reflects the relevant horizon, mitigates the primary effects from the tax changes but incorporates their second-round effects. On this horizon, which refers to the first quarter of 2024, the twelve-month inflation projection stands at 3.5%. The Committee judges that the uncertainty in its assumptions and projections is higher than usual.
7. Given the persistence of the inflationary process and the rise in inflation projections in several economies, the Committee assesses that the risk of a sharper deceleration in global economic activity has increased. This perception is reinforced by the monetary policy responses required to ensure the reanchoring of inflation, as well as the determination present in the communication from major central banks to reduce inflationary pressures.
8. The Committee assesses that a more tightening global monetary policy stance would have a disinflationary impact in Brazil in the medium term, as it leads to a widening of the global gap and less pressure on the prices of commodity and goods in general. However, it points out that the possible impacts of such repricing on assets in the short term add uncertainty about the effect on Brazilian inflation.
9. Measures of the degree of slack in the economy have great uncertainty. Currently, the analysis of some activity indicators, especially in the labor market, has led to the discussion if the output gap is narrower than that currently used by Copom in its reference scenario. In an alternative exercise assuming that the output gap would be at zero in the third quarter of 2022, inflation projections would be 4.9% and 3.0% for 2023 and 2024, respectively.
10. The Committee discussed the transmission channels and the effect of monetary policy on activity. Copom assessed that the pass-through of the Selic rate to the final rates of different types of credit has occurred as expected, although new corporate credit remain more robust than expected. The Committee continues to evaluate that a large part of the impact of monetary policy is still to be observed, both in economic activity and inflation, and that there was no substantial change in the transmission channels of monetary policy.
11. The Committee discussed the pace of disinflation of services and how inflation of less volatile items would behave in the coming quarters. It evaluated that there are several factors that may affect the path of services inflation, among them the drop in current inflation itself, which reduces the inertial effect on these items, and the more positive projections for economic activity, which raises the risk of more persistent pressures in this segment. In this regard, the Committee believes that continued monitoring of these factors is necessary to assess whether the maintenance of interest rate rates for a sufficiently long period will be enough to ensure inflation convergence.
12. In the domestic scenario, Copom believes that the permanent increase in spending and the uncertainty about its trajectory from next year on may increase the country's risk premia and inflation expectations as they put pressure on aggregate demand and worsen the fiscal path expectations. The Committee reiterates that there are several channels by which fiscal policy may affect inflation, including its effect on activity, asset prices, degree of uncertainty in the economy, and inflation expectations.
13. The Committee discussed the movements in inflation expectations in the Focus survey since the August Copom meeting. There has been a drop for 2023, but much of the movement observed is in items related to administered prices, possibly due to uncertainty about the tax recomposition of federal taxes. However, the median of inflation expectations for 2024 rose since the previous Copom meeting, even though the average has been more stable. Some members of the Committee emphasized that there was an increase in longer-term expectations in much of the emerging countries, reflecting the magnitude and persistence of the global shocks still underway. Finally, all members agree that it is the monetary authority's primary and fundamental role to conduct a monetary policy consistent with the anchoring of longer-term expectations, continuously strengthening its credibility, and reducing the future disinflationary cost.
14. The Committee emphasizes that risks to its scenarios remain in both directions. Among the upside risks for the inflationary scenario and inflation expectations, it should be emphasized (i) a greater persistence of global inflationary pressures; (ii) the uncertainty about the country's future fiscal framework and additional fiscal stimuli that support aggregate demand, partially incorporated in inflation expectations and asset prices; and (iii) an output gap tighter than the currently adopted by the Committee in its reference scenario, especially in the labor market. Among the downside risks, it should be noted (i) an additional reduction in the prices of international commodities measured in local currency; (ii) a greater than projected deceleration of global economic activity; and (iii) the continuity of tax cuts assumed to be reversed in 2023. The Committee assesses that the still uncertain and volatile current scenario requires serenity when evaluating risks.
15. Copom discussed the conduct of monetary policy, considering the set of projections evaluated, as well as the balance of risks for prospective inflation.
16. The twelve-month inflation projection for the first quarter of 2024, in the scenario using the interest rate trajectory extracted from the Focus survey, remains consistent with the strategy of inflation convergence to around the target over the relevant horizon. Moreover, the Committee continues to consider that inflation projection for 2024 is also around the target. This assessment reflects the lower-than-normal visibility of the prospective scenario, which increases the uncertainty of the specific projections communicated by the Committee over longer horizons.
17. The Committee decided again to emphasize the six-quarter-ahead horizon for its projections, and stresses that this decision is conditional on the temporary nature of the taxes. Copom anticipates that, if the alternative scenario of maintaining tax exemption on fuels in 2023 materialize, it will again emphasize horizons that include the first quarter of 2023. However, it assesses that there will be no relevant impacts on the conduct of monetary policy since the primary effects of such measures are already being disregarded.
18. Copom opened the discussion by evaluating the adjustment cycle carried out up to this meeting. It was emphasized that the current monetary tightening cycle has been quite intense and timely and that, due to the long and variable monetary policy lags, much of the expected contractionary effect and its impact on current inflation are still to be seen. These impacts should become clearer in the activity indicators throughout the second half of the year, but the Committee anticipates that measures to sustain aggregate demand hinder a more precise evaluation about the stage of the economic cycle and the impacts of monetary policy.
19. Copom then debated the monetary policy options for this meeting. The options to raise the base interest rates by 0.25 p.p. and to maintain it were widely debated. On the one hand, the additional interest rate increase would reinforce the vigilance stance and reflect the observation of a stronger than expected activity. On the other hand, caution and the need to evaluate, over time, the cumulative effects to be observed of the intense and timely monetary policy cycle already undertaken would be in favor of the maintenance. Therefore, most of the Committee members assessed that, given the data released, projections, inflation expectations, the balance of risks, and the lags of the effects of the monetary policy already in significantly contractionary territory, it was appropriate to maintain the interest rate at the level of 13.75% p.a. The Committee reinforced that it is necessary to remain vigilant, assessing if the strategy of maintaining the Selic rate for a sufficiently long period will be enough to ensure the convergence of inflation.
20. Two Committee members voted for a residual adjustment of 0.25 p.p on the Selic rate. These members argued that the additional increase would strengthen the Committee’s message of commitment to its strategy, given the rise in inflation expectations and the projection in the reference scenario for 2024, in an environment of uncertainty about the level of the output gap and the dynamics of activity. These members consider that the upside risks listed in the balance of risks may have longer-lasting impacts if they materialize, suggesting additional caution in assessing the reference scenario projections for the year 2024.
21. The Committee unanimously emphasizes that it will persist until the disinflationary process consolidates and inflation expectations anchor around its targets. The Committee emphasizes that it will not hesitate to resume the tightening cycle if the disinflationary process does not proceed as expected.
22. Considering the assessed scenarios, the balance of risks, and the broad array of available information, the Copom decided to maintain the Selic rate at 13.75% p.a. The Committee judges that this decision reflects the uncertainty around its scenarios for prospective inflation, an even higher-than-usual variance in the balance of risks and is consistent with the strategy for inflation convergence to a level around its target throughout the relevant horizon for monetary policy, which includes 2023 and, to a lesser extent, 2024. Without compromising its fundamental objective of ensuring price stability, this decision also implies smoothing of economic fluctuations and fosters full employment.
23. The Committee will remain vigilant, assessing if the strategy of maintaining the Selic rate for a sufficiently long period will be enough to ensure the convergence of inflation. The Committee emphasizes that it will persist until the disinflationary process consolidates and inflation expectations anchor around its targets. The Committee reinforces that future monetary policy steps can be adjusted and will not hesitate to resume the tightening cycle if the disinflationary process does not proceed as expected.
24. The following members of the Committee voted for this decision: Roberto Oliveira Campos Neto (Governor), Bruno Serra Fernandes, Carolina de Assis Barros, Diogo Abry Guillen, Maurício Costa de Moura, Otávio Ribeiro Damaso, and Paulo Sérgio Neves de Souza. The following members voted for a residual adjustment of 0.25 p.p: Fernanda Magalhães Rumenos Guardado and Renato Dias de Brito Gomes.


1. The global environment has deteriorated further. Inflationary pressures arising from the global recovery after the pandemic period have intensified due to the increase of commodity prices in 2022 and, more recently, by the new wave of Covid-19 in China, which might potentially extend even further the process of normalization in the supply of industrial inputs. The reorganization of global production chains, already fueled by the war in Ukraine, is expected to intensify, with the search for a greater regional arrangement of the supply of inputs. In Copom’s view, these developments might have long-term consequences and lead to more persistent inflationary pressures on global production of goods.
2. Central banks in developed and emerging countries have adopted a more contractionary stance against increased inflation, although, in most of these economies, current interest rates are still at levels evaluated as expansionary. Because of the potential persistence of the inflationary pressure, the repricing of monetary policy in advanced countries has impacted financial conditions in emerging countries. The Committee has also discussed the growing risks involving a global deceleration in a highly pressured inflationary environment.
3. Turning to the Brazilian economy, the set of indicators released since the previous Copom meeting suggests a rate of growth in line with the Committee’s expectations. The labor market is still on a recovery path, and the latest trade and industry indicators have improved.
4. Consumer inflation remains high, with increases spread among several components, and continues to be more persistent than anticipated. Whereas inflation of services and industrial goods are still high, the recent shocks have led to a strong increase in the components associated with food and fuels. Recent readings were higher than expected, and the surprise came on both the more volatile components and the items associated with core inflation. As for the more volatile components, the increase of gasoline prices is still noteworthy, with greater and faster impact than anticipated. The inflation of the components more sensitive to the economic cycle and the monetary policy continues elevated, and the various measures of core inflation are above the range compatible with meeting the inflation target. Inflation expectations for 2022 and 2023 collected by the Focus survey are around 7.9% and 4.1%, respectively.
5. In the reference scenario, the interest rate path is extracted from the Focus survey (the Selic rate rises to 13.25% p.a. in 2022 and decreases to 9.25% p.a. in 2023) and the exchange rate starts at USD/BRL 4.952 and evolves according to the purchasing power parity (PPP). The Committee decided to keep the assumption that oil prices follow approximately the futures market curve until the end of 2022, ending the year at USD 100/barrel, and then start increasing 2% per year in January 2023. The energy flag is assumed to be “yellow” in December of 2022 and 2023. In this scenario, Copom’s inflation projections stand at 7.3% for 2022 and 3.4% for 2023. Inflation projections for administered prices are 6.4% for 2022 and 5.7% for 2023. The Committee judges that the uncertainty in its assumptions and projections is higher than usual.
6. The Committee opened its debate about the risks regarding its projections by discussing some of the likely explanations for the difference between the projection in its reference scenario and the analysts’ projections. Some members emphasized that high current inflation has contaminated longer-term expectations beyond what was expected. Moreover, some additional likely explanations have been discussed through the analysis of alternative scenarios. Firstly, Copom analyzed the impact of a slower reversion in industrial goods inflation, due to successive shocks on global production chains. In addition, Copom also observed that different assumptions about the neutral interest rate have an impact on its projections, albeit modest at the relevant horizon. Finally, inflationary impacts stemming from different assumptions about the convergence between the prices of oil and its by-products have also seemed relevant.
7. In what regards the global inflationary scenario, Copom assessed that inflationary pressures have intensified and are characterized by both a persistently high demand for goods (for example, in the U.S. economy) and supply shocks associated with the war in Ukraine and the Chinese policy to fight Covid-19. These factors might potentially generate persistent inflationary pressures in several economies, particularly in those countries with more lagged normalization processes of fiscal and monetary policies.
8. Furthermore, the Committee evaluated that there is still high uncertainty about the prospective trajectory of commodity prices in local currency, because of the war in Ukraine and the economic recovery in the post-pandemic period. Copom assesses that there is a possibility of reversion, even if partial, of the increase in international commodities measured in local currency.
9. The Committee has debated the fiscal risk and how it affects the conduct of monetary policy. Uncertainties regarding the future of the current fiscal framework result in increased risk premia and raises the risk of a deanchoring of inflation expectations. This movement is already seen, to some extent, and is already partially incorporated in the longer-term inflation expectations extracted from the Focus survey, as well as in the prices of several domestic assets. The Committee emphasized that the appropriate level of monetary tightening is also dependent on the prevailing fiscal framework. Weaknesses in the structural reform effort, as well as permanent changes to the fiscal consolidation process could result in an increase in the neutral interest rate.
10. The Committee evaluated the risks around the reference scenario for economic growth in 2022 and 2023. The Committee highlighted that economic growth came in line with expectations, but the tightening of financial conditions brings a risk of greater-than-anticipated deceleration in the quarters ahead, when its impacts tend to be more evident.
11. The Committee emphasizes that risks to its inflation scenarios remain in both directions. Among the upside risks for the inflationary scenario and inflation expectations, it should be emphasized (i) a greater persistence of global inflationary pressures; and (ii) an increase in the risk premium due to the uncertainty about the country's future fiscal framework, partially incorporated in inflation expectations and asset prices. Among the downside risks, it should be noted (i) a possible reversion, even if partial, of the increase in the price of international commodities measured in local currency; and (ii) a greater deceleration of economic activity than projected. The Committee assesses that the uncertain and volatile current scenario requires serenity when evaluating the risks.
12. Copom discussed the conduct of monetary policy, considering the set of projections evaluated, as well as the balance of risks for inflation.
13. Copom opened the discussion by evaluating the adjustment cycle carried out up to this meeting. It was emphasized that the current monetary tightening cycle was quite intense and timely and that, due to monetary policy lags, much of the expected contractionary effect and its impact on current inflation are still to be seen.
14. Still, Copom noted that an additional deterioration was observed in both the short-term inflationary dynamics and the longer-term projections, even though the scenario is characterized by higher than usual uncertainty and volatility.
15. Copom then debated the monetary policy options for this meeting. The Committee concluded that a further adjustment of 1.00 percentage point was appropriate.
16. Copom members then discussed how to signal the future monetary policy. The Committee opted to signal, as likely, an extension of the cycle, with an adjustment of lower magnitude in the next meeting. This strategy was deemed more appropriate to ensure the convergence of inflation over the relevant projection horizon, as well as the anchoring of longer-term inflation expectations, while reflects the already implemented monetary tightening, reinforces the cautious monetary policy stance and emphasizes the uncertain scenario.
17. Taking into account the assessed scenarios, the balance of risks, and the broad array of available information, the Copom unanimously decided to increase the Selic rate by 1.00 p.p. to 12.75% p.a. The Committee judges that this decision reflects the uncertainty around its scenarios for prospective inflation, an even higher-than-usual variance in the balance of risks and is consistent with the convergence of inflation to its target throughout the relevant horizon for monetary policy, which includes 2023. Without compromising its fundamental objective of ensuring price stability, this decision also implies smoothing of economic fluctuations and fosters full employment.
18. The Committee considers that, given its inflation projections and the risk of a deanchoring of long-term expectations, it is appropriate to continue advancing in the process of monetary tightening significantly into an even more restrictive territory. The Committee emphasizes that it will persist in its strategy until the disinflation process and the expectation anchoring around its targets consolidate.
19. For its next meeting, the Committee foresees as likely an extension of the cycle, with an adjustment of lower magnitude. The Committee stresses that the heightened uncertainty of the current scenario, the advanced stage of the current monetary policy cycle, and its impacts yet to be observed require additional caution in its actions. The Copom emphasizes that its future policy steps could be adjusted to ensure the convergence of inflation towards its targets and will depend on the evolution of economic activity, on the balance of risks, and on inflation expectations and projections for the relevant horizon for monetary policy.
20. The following members of the Committee voted for this decision: Roberto de Oliveira Campos Neto (Governor), Bruno Serra Fernandes, Carolina de Assis Barros, Diogo Abry Guillen, Fernanda Magalhães Rumenos Guardado, Maurício Costa de Moura, Otávio Ribeiro Damaso, Paulo Sérgio Neves de Souza and Renato Dias de Brito Gomes.


1. The global environment remains challenging. The episodes involving banks abroad have increased the uncertainty, but with limited contagion on financial conditions so far, requiring constant monitoring. The impact of these episodes on financial conditions and consequently on global growth is still uncertain but has a negative bias. Major economies have emphasized the principle of separation of objectives and instruments in the conduct of monetary and macroprudential policies, despite incorporating the impacts on activity in their scenarios.
2. At the same time, the central banks of major economies remain committed to bringing inflation back to its targets, in an environment in which inflation has been resilient. Recent inflation readings from several countries point to some stabilization of core inflation at levels above their targets and reinforce the persistent nature of the current inflationary process. Furthermore, most monetary authorities signal a prolonged period of high interest rates necessary to fight inflationary pressures, which calls for greater caution in the conduct of economic policies also by emerging countries.
3. Turning to the Brazilian economy, the Committee's expected scenario of gradual growth slowdown is still corroborated by the recent set of indicators. Some moderation is observed in the coincident indicators of activity, as well as a slowdown in the credit market at the margin. The labor market, which surprised positively throughout 2022, has shown resilience, with a net increase in job creation and relative stability in the unemployment rate.
4. Consumer inflation remains high. The inflation of the components more sensitive to the economic cycle and to the monetary policy, which present greater inflationary inertia, remains above the range compatible with meeting the inflation target. Inflation expectations for 2023 and 2024 collected by the Focus survey have increased marginally and are around 6.1% and 4.2%, respectively.
5. In the reference scenario, the interest rate path is extracted from the Focus survey, and the exchange rate starts at USD/BRL 5.052 and evolves according to the purchasing power parity (PPP). The Committee assumes that oil prices follow approximately the futures market curve for the following six months and then start increasing 2% per year onwards. Moreover, the energy flag is assumed to be “green” in December 2023 and 2024. In this scenario, Copom’s inflation projections stand at 5.8% for 2023 and 3.6% for 2024. Inflation projections for administered prices are 10.8% for 2023 and 5.2% for 2024.
6. The Committee analyzed an alternative scenario with stable interest rates over the entire relevant horizon. In such scenario, inflation projections stand at 5.7% for 2023 and 2.9% for 2024.
7. The neutral real interest rate is the rate in which, in the absence of impact from other factors, the inflation rate remains stable, and the output grows according to its potential, reflecting productivity gains and changes in the structural fundamentals of the economy. In assessing the factors that could lead to unfold an alternative scenario characterized by a higher neutral interest rate, emphasis was placed on the possible adoption of expansionary parafiscal policies, which can increase the neutral rate and reduce the power of monetary policy, as previously remarked by the Committee. Still regarding the debate about the current neutral interest rate in the economy, some members raised an additional aspect, related to the recent economic data set. These members pointed out that a scenario marked by a possible rise in neutral interest rates in major economies, resilience in Brazilian activity, and a slow disinflationary process could be compatible with a higher measure of neutral rate than that assumed by the Committee. Under this argument, therefore, the current monetary tightening would lead to a lower contractionary impact than that implicit in the Copom's scenarios. However, most of the committee members judged that this interpretation still seems premature and needs further corroboration by data.
8. Regarding the global outlook, the low degree of labor market slack in some economies and a persistently high current inflation and widespread in the services sector suggest that inflationary pressures should last longer. In this context, reducing inflationary pressures continues to require the commitment and determination of central banks to control inflation by maintaining the tightening of financial conditions for a longer period. Such determination, with a likely impact upon asset prices in the short term, coupled with a credit slowdown in major economies, contributes to a more credible and lasting global disinflationary process.
9. Despite the limited contagion from the recent financial instability in the US banking sector, a further tightening of credit conditions is observed in that country. Thus, despite the reduction in the likelihood of a disruption in the credit market, a scenario with a more restricted credit supply and, consequently, lower economic growth, prevails. The Committee will continue to monitor this situation, analyzing possible transmission channels, although the direct impact on the domestic financial system is deemed limited. The Committee reinforces that the best contribution of monetary policy is to fight inflationary pressures and smooth economic fluctuations, and it emphasizes, once again, the separation of instruments between the objectives of inflation control and financial stability.
10. Brazilian activity data point to a moderate pace of growth at the margin, with emphasis on the support given by consumption, on the demand side, and by the agricultural and livestock sector, on the supply side. Some members reminded that the methodological changes in monthly activity surveys may increase uncertainty in GDP projections and in the current assessment of activity. Copom anticipates a more vigorous GDP growth in the release of the first quarter of 2023, especially due to agricultural production, followed by moderation in economic activity in an environment marked by resilience in the labor market. In addition, formal employment data continued to reveal increase of job creation in the most recent period. Some members noted that there is a movement towards a partial recomposition of recent losses in real wages. This movement is expected and has been accompanied by a deceleration in nominal gains, which is expected to intensify ahead. Finally, it was noted that the economic growth outlook has not changed significantly in the recent period.
11. The Committee believes that the disinflation dynamics continues to be characterized by a process with two distinct stages. In the first stage, already completed, the speed of disinflation was greater, with a greater effect on administered prices and an indirect effect on market prices through less inertia. In the second stage, which has been currently observed, the speed of disinflation is slower, and core inflation – which is more affected by the aggregate demand and the interest rate policy – declines at a slower pace, responding to the output gap and future inflation expectations. The most recent inflationary data support the view of a slower disinflation process, in line with the view of an inflation driven by excess of demand, mostly in the services segment. The Committee reaffirms that the disinflation process at its current stage demands serenity and patience in the conduct of monetary policy to ensure the convergence of inflation to its targets.
12. Still in the discussion about inflationary behavior, the recent benign behavior of wholesale prices was emphasized, both for food and industrial goods, in line with the Committee's view. In addition, due to a comfortable water scenario for 2023, the green energy flag is assumed for December. Moreover, seeking to avoid an excessive impact of the assumption about energy tariff flags, which are inherently affected by a lot of uncertainty for longer horizons, on inflation projections and with possible impacts on the conduct of monetary policy, it was decided to adopt the neutral flag, i.e., green flag for December 2024, also in line with the view of most analysts outlined in the pre-Copom questionnaire. In terms of the trajectory of consumer inflation over 2023, it should be noted that a relevant drop is expected in the twelve-month inflation during this second quarter, due to the base effect of the previous year. In the second half of 2023, as the twelve-month inflation no longer includes the effects of the tax measures that reduced the price level in the third quarter of 2022 and the effects of this year's tax measures will still be included, this inflation indicator will rise. Copom, therefore, emphasizes that such behavior does not reflect the underlying inflationary dynamics, nor does it change the view on future prospects.
13. Inflation expectations remain deanchored from the targets set by the National Monetary Council, having slightly deteriorated at the margin. The Committee is following this movement with concern and continues to assess that deanchored expectations raise the cost of bringing inflation back to the target. It was emphasized again that the behavior of expectations is a fundamental aspect of the inflationary process since it serves as a guide for present and future prices and wages setting. Thus, as expectations rise, there is a greater rise in prices in the current period and the inflationary process is fueled by these expectations. It was also highlighted that the anchoring of expectations is a key factor for price stability. In this context, the Committee reinforces that decisions that induce to the reanchoring of expectations and that raise confidence in the inflation targets would contribute to a faster and less costly disinflation process.
14. The domestic credit granting scenario seems compatible with the current stage of the monetary policy cycle, despite the persistence of a stronger decrease in the supply of credit in specific modalities. The Committee anticipates a moderation in credit granting over the next few months, but in line with what has been observed in previous monetary policy tightening cycles. The Committee believes that the BCB has the appropriate and necessary liquidity instruments, associated with macroprudential policy, to deal with relevant frictions in the system, should they occur.
15. The Committee also discussed the impacts of the fiscal scenario on inflation and assesses that the presentation of the fiscal framework has reduced the uncertainty associated with extreme scenarios of public debt growth. The Committee will continue to monitor the processing and implementation of the fiscal framework presented by the government and under discussion in the National Congress. Copom again emphasized that there is no mechanical relationship between the convergence of inflation and the approval of the fiscal framework since the inflation path is conditional on the reaction of inflation expectations and financial conditions. The materialization of a scenario with a solid and credible fiscal framework may lead to a more benign disinflation process through its effect on the expectations channel, by reducing inflation expectations, uncertainty in the economy, the risk premium associated with domestic assets and, consequently, the Committee's projections.
16. The Committee emphasizes that risks to its scenarios remain in both directions. Among the upside risks for the inflationary scenario and inflation expectations, it should be emphasized (i) a greater persistence of global inflationary pressures; (ii) the lingering uncertainty about the final fiscal framework to be approved by the National Congress and, more relevant for monetary policy, its impacts on the expected paths of the public debt and of inflation expectations, and on risky assets; and (iii) a larger or more persistent deanchoring of long-term inflation expectations. Among the downside risks, it should be noted (i) an additional reduction in the prices of international commodities measured in local currency; (ii) a greater than projected deceleration of global economic activity, particularly due to adverse conditions in the global financial system; and (iii) a slowdown in domestic credit granting larger than what would be compatible with the current stance of monetary policy.
17. On the one hand, the reinstatement of fuel taxes and, primarily, the presentation of a proposal for the fiscal framework have partly reduced the uncertainty arising from fiscal policy. On the other hand, the current scenario, characterized by a stage in which the disinflationary process tends to be slower in an environment of deanchored inflation expectations, requires further attention when conducting monetary policy. Copom emphasizes that there is no mechanical relationship between the convergence of inflation and the approval of the fiscal framework, and judges that the deanchoring of long-term inflation expectations raises the cost of the disinflation that is needed to reach the targets established by the National Monetary Council. In this scenario, Copom reaffirms its commitment to set monetary policy to meet the targets.
18. Copom discussed the conduct of monetary policy, considering the set of projections evaluated, as well as the balance of risks for inflation.
19. Copom started the debate by evaluating whether the previously outlined strategy of stable interest rates would be enough to ensure the convergence of inflation towards to its targets. To this end, the Committee has continued its process of analyzing the main determinants of the inflation path and how they have behaved in the most recent period. No significant change occurred in the prospective scenario for the output gap. As for services inflation and measures of core inflation, increased resilience and lower speed are observed in the recent releases, in line with the non-linear process already anticipated by Copom. In addition, inflation expectations remain deanchored, partially related to the questioning about a possible change in future inflation targets.
20. Copom's inflation projections have remained relatively stable since the previous meeting. Finally, in the balance of risks, besides the factors already mentioned, the Committee evaluates that the probability of the most extreme scenarios for the public debt trajectory has reduced, but also noted that there was no relevant change in the inflation projections since expectations did not change significantly. This behavior reinforces the understanding that there is no mechanical relationship between monetary policy and the fiscal framework. Copom emphasized that the conduct of monetary policy, at this moment, requires serenity and patience to incorporate the inherent delays in the inflation control through interest rates and, therefore, to reach the goals in the relevant monetary policy horizon. Therefore, the Committee assessed that the scenarios that could require a resumption of the monetary policy tightening cycle have become less likely.
21. Considering the assessed scenarios, the balance of risks, and the broad array of available information, Copom decided to maintain the Selic rate at 13.75% p.a. The Committee judges that this decision is consistent with the strategy for inflation convergence to a level around its target throughout the relevant horizon for monetary policy, which includes the year of 2024. Without compromising its fundamental objective of ensuring price stability, this decision also implies smoothing economic fluctuations and fostering full employment.
22. Taking into account the uncertainty of the scenarios, the Committee remains vigilant, assessing if the strategy of maintaining the Selic rate for a long period will be enough to ensure the convergence of inflation. The Committee emphasizes that it will persist until the disinflationary process consolidates and inflation expectations anchor around its targets. The Committee judges that the current scenario demands patience and serenity in the conduct of monetary policy. Copom emphasizes that, although a less likely scenario, it will not hesitate to resume the tightening cycle if the disinflationary process does not proceed as expected.
23. The following members of the Committee voted for this decision: Roberto de Oliveira Campos Neto (Governor), Diogo Abry Guillen, Fernanda Magalhães Rumenos Guardado, Maurício Costa de Moura, Otávio Ribeiro Damaso, Paulo Sérgio Neves de Souza, and Renato Dias de Brito Gomes.


1. Regarding the global outlook, the environment is becoming less favorable, reflecting the persistent inflation and the consequent central banks’ reaction. Growth in 2022 should be lower, with the reversal of fiscal stimuli and advance in the process of monetary policy normalization. This combination implies a more challenging scenario for emerging markets.
2. Turning to the Brazilian economy, recently released industrial output and trade indicators show negative and below-expected results. On the other hand, the services segments hardest hit by the pandemic continue on a robust recovery trajectory. The Committee maintained the expectation of a recovery in activity in the second half of the year, although less intense and more concentrated in the services sector. This reassessment reflects the impact of supply shortages of inputs in some productive chains, which should persist until 2022.
3. For 2022, if on the one hand the rise in risk premia and the tightening of financial conditions act stifling the economic activity, on the other Copom considers that economic growth will be benefited by three tailwinds: the continued recovery of the labor market and the services sector; the performance of sectors less dependent on the business cycles – such as agriculture and livestock and the extractive industry; and the remaining effects of the normalization of the economy as the health crisis recedes.
4. Consumer inflation remains high and has been more persistent than anticipated. Price increases are more widespread and also include items more associated with core inflation. The increase of industrial prices has not slowed down and should persist in the short term, whereas services inflation accelerated due to the gradual normalization in the sector’s activity, as expected. Besides these developments, since the previous Copom meeting there has been a substantial increase in international energy commodity prices, whose inflationary impact is amplified by the BRL depreciation. Combined, they are the preponderant factor for the increase in the Committee's inflation projections for both 2021 and 2022.
5. The various measures of core inflation are above the range compatible with meeting the inflation target. Inflation expectations for 2021, 2022, and 2023 collected by the Focus survey are around 9.0%, 4.4%, and 3.3%, respectively.
6. Copom's inflation projections in its baseline scenario, with interest rate path extracted from the Focus survey and exchange rate starting at USD/BRL 5.602 and evolving according to the purchase power parity (PPP), stand around 9.5% for 2021, 4.1% for 2022, and 3.1% for 2023. This scenario assumes a path for the Selic rate that rises to 8.75% p.a. in 2021 and to 9.75% p.a. in 2022, ending the year at 9.50% p.a., and drops to 7.00% p.a. during 2023. In this scenario, inflation projections for administered prices are 17.1% for 2021, 5.2% for 2022, and 5.1% for 2023. The energy flag is assumed to be “water scarcity” in December 2021 and “red level 2” in December of 2022 and 2023.
7. The Copom’s baseline scenario for inflation encompasses risk factors in both directions.
8. On the one hand, a possible reversion, even if partial, of the recent increase in the price of international commoditiesmeasured in local currency would produce a lower-than-projected inflation in the baseline scenario.
9. On the other hand, further extensions of fiscal policy responses to the pandemic that increase aggregate demand and deteriorate the fiscal path may pressure the country's risk premium.
10. Despite the more positive public accounts data, the Committee assesses that recent questioning regarding the fiscal framework increased the risk of deanchoring inflation expectations, raising the upward asymmetry in the balance of risks. This implies a higher probability of inflation paths above the one projected under the baseline scenario.
11. The public accounts have performed better than expected. Assuming the current fiscal framework is maintained, in particular the control of spending growth, Copom's projections foresee a falling trajectory for the public debt as a percentage of GDP. However, between Copom's meetings, relevant questionings arose regarding the future of the current fiscal framework, resulting in higher risk premia. These questionings have also raised the risk of deanchoring inflation expectations, increasing the upward asymmetry in the balance of risks for the conduct of monetary policy. This implies assigning greater probability to alternative scenarios that consider higher neutral interest rates.
12. The Committee reiterates that the process of reforms and necessary adjustments in the Brazilian economy is essential for a sustainable economic growth. Weaknesses in the structural reform effort and permanent changes to the fiscal consolidation process could result in an increase in the structural interest rate.
13. Next, Copom discussed the implementation of monetary policy, considering not only the baseline scenario, but also the balance of risks for inflation. According to the baseline scenario, which uses the interest rate path extracted from the Focus survey and the exchange rate at purchase power parity, the inflation projections are above the target for 2022 and around the target for 2023. The Committee pondered that the asymmetry in the balance of risks resulting from the developments in the fiscal scenario implies an increase in the upward risk to its baseline scenario projections and assessed that this upside bias is now larger than previously considered. Therefore, the Committee concluded that the appropriate degree of monetary tightening is significantly more contractionary than that used in the baseline scenario.
14. In view of this, Copom assessed the appropriate pace of interest rate hikes. To this end, it analyzed the convergence of inflation to targets using simulations with different monetary policy paths under different alternative scenarios. The Committee pondered that, at this moment, shocks in BRL-denominated commodity prices already impact the 2022 projections, raising their volatility. Nevertheless, Copom understands that a process of deanchoring inflation expectations may cause high economic costs in the long term and thus decided to choose a pace of interest rate hikes compatible with the convergence of inflation to the target still in 2022.
15. The Committee also considered scenarios with adjustments greater than 1.50 p.p. The prevailing view, however, was that monetary policy tightening paths with 1.50 p.p. steps, considering different ending rates, are consistent with inflation converging to the target in 2022, even considering the current asymmetry of the balance of risks.
16. Taking into account the baseline scenario, the balance of risks, and the broad array of available information, the Copom unanimously decided to increase the Selic rate by 1.50 p.p. to 7.75% p.a. The Committee judges that this decision reflects its baseline scenario for prospective inflation, a higher-than-usual variance in the balance of risks, and it is consistent with convergence of inflation to the targets over the relevant horizon for monetary policy, which includes 2022 and 2023. Without compromising its fundamental objective of ensuring price stability, this decision also implies smoothing of economic fluctuations and fosters full employment.
17. The Committee considers that, given the deterioration of the balance of risks and the increase in its inflation projections, this pace is the most appropriate to guarantee inflation convergence to the targets at the relevant horizon. At this moment, the Copom’s baseline scenario and balance of risks indicate as appropriate to advance the process of monetary tightening even further into the restrictive territory.
18. For the next meeting, the Committee foresees another adjustment of the same magnitude. Copom emphasizes that its future policy steps could be adjusted to ensure the achievement of the inflation target and will depend on the evolution of economic activity, on the balance of risks, and on inflation expectations and projections for the relevant horizon for monetary policy.
19. The following members of the Committee voted for this decision: Roberto Oliveira Campos Neto (Governor), Bruno Serra Fernandes, Carolina de Assis Barros, Fabio Kanczuk, Fernanda Magalhães Rumenos Guardado, João Manoel Pinho de Mello, Maurício Costa de Moura, Otávio Ribeiro Damaso, and Paulo Sérgio Neves de Souza.


1. The global environment has deteriorated further, marked by downward revisions on prospective global growth in an environment of strong and persistent inflationary pressures arising from the global recovery after the pandemic period. These pressures have intensified due to the increase of commodity prices in 2022 and, more recently, by the Covid-19 wave in China, further prolonging the process of normalization in the supply of industrial inputs. The reorganization of global production chains, already fueled by the war in Ukraine, is expected to intensify with the search for a greater regional arrangement of the supply of inputs. In Copom’s view, these developments might have long-term consequences and lead to more persistent inflationary pressures on global production of goods.
2. The growth of major economies has been revised down for 2022 and 2023 due to the expected reversal of the stimuli implemented during the long pandemic period, in particular by monetary policy action. Negative growth revisions were also noted for China, partially reflecting the zero-Covid policy adopted by that country.
3. Central banks in developed and emerging countries have adopted a more contractionary stance against increased inflation, although, in some of these economies, current interest rates are still at levels evaluated as expansionary. The repricing of monetary policy in advanced economies, the increase in risk aversion, and the change in the growth outlook have affected financial conditions in both advanced and emerging economies. The Committee has also discussed the growing risks involving a global deceleration in a highly pressured inflationary environment.
4. Turning to the Brazilian economy, the set of indicators released since the previous meeting suggests a growth rate above the Committee’s expectations. Indicators related to the labor market continue to recover and the release of the 2022Q1 GDP pointed to a higher-than-expected pace of activity, raising the statistical carry-over for this year. Household consumption continues to contribute positively, while, in 2022Q1, Gross Fixed Capital Formation contributed negatively.
5. Consumer inflation remains high, with increases spread among several components, and continues to be more persistent than anticipated. The inflation of services and of industrial goods remain high, and the recent shocks continue to cause a strong increase in food and fuel-related components. Recent readings were higher than expected and the surprise came in both the more volatile components and on items associated with core inflation. The inflation of the components most sensitive to the economic cycle and the monetary policy continues elevated, and the various measures of underlying inflation accelerated, standing above the range compatible with meeting the inflation target. Inflation expectations for 2022, 2023, and 2024 collected by the Focus survey are around 8.5%, 4.7%, and 3.25%, respectively.
6. In the reference scenario, the interest rate path is extracted from the Focus survey, and the exchange rate starts at USD/BRL 4.902  and evolves according to the purchasing power parity (PPP). This scenario assumes a path for the Selic rate that ends 2022 at 13.25% p.a., falls to 10.0% in 2023 and 7.50% in 2024. The Committee decided to keep the assumption that oil prices follow approximately the futures market curve for the following six months, ending the year at USD 110/barrel, and then start increasing 2% per year in January 2023. Moreover, the energy flag is assumed to be “yellow” in December 2022, 2023, and 2024. In this scenario, Copom’s inflation projections stand at 8.8% for 2022, 4.0% for 2023, and 2.7% for 2024. Inflation projections for administered prices are 7.0% for 2022, 6.3% for 2023, and 3.3% for 2024. The projections based on the reference scenario do not incorporate the tax measures on fuels, energy, and telecom prices under the approval process. The Committee judges that the uncertainty in its assumptions and projections is higher than usual and has increased since the previous meeting.
7. The Committee assesses that the global inflationary scenario continues to be marked by inflationary pressures stemming from both persistently high demand for goods and supply shocks linked to the war in Ukraine and China's Covid-19 policy. The Committee further believes that recent policies restricting trade in agricultural products in commodity-producing countries, coupled with the effects of the war in Ukraine, bring additional risk to global inflationary pressures. In the Copom’s view, these developments might have long-term consequences and lead to more persistent inflationary pressures.
8. The Committee then discussed the growing risks involving a sharper global deceleration in a highly pressured inflationary environment. The Committee already anticipates a slowdown in global activity in the coming quarters, due to geopolitical tensions and the monetary policy tightening, as well as financial conditions underway in several central economies. The Committee believes that the global synchrony in the process of stimulus withdrawal introduces additional risks to markets and may boost its impact on the prospective scenario.
9. In this context of global deceleration, Copom considers a possible reversion, even if partial, of the increase in international commodities measured in local currency observed in recent quarters.
10. The Committee reinforces that uncertainty about the future of the country's fiscal framework and fiscal policies that support aggregate demand may bring an upside risk to the inflationary scenario and to inflation expectations.
11. The Committee believes that recent domestic activity data, which have prompted a positive revision to 2022 growth, still reflect, for the most part, the post-pandemic normalization process of the economy, both in the higher consumption of services and in the utilization of the excess savings observed over historical records, and the transitory fiscal stimulus provided in the first half of the year. The Committee assesses that activity should decelerate in the coming quarters when the lagged impacts of monetary policy will be more strongly felt.
12. The Committee emphasizes that risks to its scenarios remain in both directions. Among the upside risks for the inflationary scenario and inflation expectations, it should be emphasized (i) a greater persistence of global inflationary pressures; and (ii) the uncertainty about the country's future fiscal framework and fiscal policies that support aggregate demand, partially incorporated in inflation expectations and asset prices. Among the downside risks, it should be noted (i) a possible reversion, even if partial, of the increase in the price of international commodities measured in local currency; and (ii) a greater deceleration of economic activity than projected. The Committee assessed that the tax measures under the approval process imply a sizable reduction in inflation in the current year, although they raise by a smaller magnitude inflation in the relevant horizon for monetary policy. The Committee assesses that the uncertain and volatile current scenario requires serenity when evaluating the risks.
13. Copom discussed the conduct of monetary policy, considering the set of projections analyzed, as well as the balance of risks for prospective inflation.
14. Copom opened the discussion by evaluating the adjustment cycle carried out up to this meeting. It was emphasized that the current monetary tightening cycle was quite intense and timely and that, due to monetary policy lags, much of the expected contractionary effect and its impact on current inflation are still to be seen.
15. Still, Copom observed deterioration in both the short-term inflationary dynamics and the longer-term projections, even though the scenario is surrounded by higher than usual uncertainty and volatility.
16. The Committee believes, based on the projections used and on its balance of risks, that the strategy required to bring the 4.0% projected inflation to around the target for the relevant horizon combines, on the one hand, a terminal interest rate above that used in the reference scenario and, on the other, the maintenance of the interest rate in significantly contractionary territory for a longer period than that used in the reference scenario. Thus, the strategy of convergence around the target requires a more contractionary interest rate than that used in the reference scenario for the entire relevant horizon.
17. Copom then debated the monetary policy options for this meeting. The Committee concluded that a further adjustment of 0.50 p.p. was appropriate in an environment of high uncertainty and the significantly contractionary stage of monetary policy, which, considering its lags, should affect the economy more strongly as of the second half of 2022.
18. The signaling for the next meeting was then discussed. Given the persistence of the recent shocks, the Committee evaluated that only the perspective of maintaining the Selic rate for a sufficiently long period would not assure, at this moment, the convergence of inflation around the target in the relevant horizon. The Committee then chose to signal a further adjustment, of equal or smaller magnitude. This strategy was deemed more appropriate to ensure the convergence of inflation over the relevant horizon, as well as the anchoring of longer-term inflation expectations, while reflecting the already implemented monetary tightening, reinforcing the cautious monetary policy stance, and emphasizing the uncertainty of the scenario.
19. Taking into account the assessed scenarios, the balance of risks, and the broad array of available information, the Copom unanimously decided to increase the Selic rate by 0.50 p.p. to 13.25% p.a. The Committee judges that this decision reflects the uncertainty around its scenarios for prospective inflation, an even higher-than-usual variance in the balance of risks and is consistent with the strategy for inflation convergence to a level around its target throughout the relevant horizon for monetary policy, which includes 2023. Without compromising its fundamental objective of ensuring price stability, this decision also implies smoothing of economic fluctuations and fosters full employment.
20. The Committee considers that, given its inflation projections and the risk of a deanchoring of long-term expectations, it is appropriate to continue advancing in the process of monetary tightening significantly into even more restrictive territory. The Committee emphasizes that it will persist in its strategy until the disinflation process and the expectation anchoring around its targets consolidate.
21. For its next meeting, the Committee foresees a new adjustment, of the same or lower magnitude. The Committee stresses that the growing uncertainty of the current scenario, coupled with the advanced stage of the current monetary policy cycle, and its impacts yet to be observed, require additional caution in its actions. The Copom emphasizes that its future policy steps could be adjusted to ensure the convergence of inflation towards its targets and will depend on the evolution of economic activity, on the balance of risks, and on inflation expectations and projections for the relevant horizon for monetary policy.
22. The following members of the Committee voted for this decision: Roberto de Oliveira Campos Neto (Governor), Bruno Serra Fernandes, Carolina de Assis Barros, Diogo Abry Guillen, Fernanda Magalhães Rumenos Guardado, Maurício Costa de Moura, Otávio Ribeiro Damaso, Paulo Sérgio Neves de Souza, and Renato Dias de Brito Gomes.