Five rate cuts later, Brazil still tops the real interest rate podium

On Sept. 16, 2026, Copom, the Central Bank's monetary policy committee, cut the Selic from 14% to 13.75% a year, the fifth straight cut. The same day, a survey by MoneYou with Lev Intelligence compared the real interest rate of 40 countries, that is, the interest rate minus the inflation expected over the next 12 months. Brazil ranked first, at 8.45% a year, 1.66 points above Russia. The average across the 40 countries was 1.62%.

In nominal terms, Brazil is only fourth: Turkey (37%), Argentina (29%) and Russia (14%) charge more. The difference is that in those countries inflation is also much higher. Here, inflation is close to 4% to 5%, and interest rates remain high.

Six years in two lines

The current podium is the result of a roller coaster. During the pandemic, the Central Bank took the Selic to the lowest level in its history, and the effective rate stayed at 1.90% a year until early 2021. Inflation, which had been at 2% to 4%, shot up and reached 12.13% over 12 months in April 2022.

The Central Bank responded with a sharp, fast tightening cycle: in about a year and a half, the effective Selic went from 1.90% to 13.65%. Inflation eased, the Selic fell to near 10.40% in 2024, rose again to 14.90% in 2025 and only began to fall in March 2026.

The distance between the two lines is the real interest rate. Looking backward, with the inflation that actually happened, it was negative for 22 straight months, from July 2020 to April 2022, and reached −4.4% in July 2021. Anyone who left money in savings accounts (poupança) or in CDI-linked investments (tied to the interbank rate) during that period lost purchasing power.

Then the situation reversed. In February 2026, the backward-looking real rate reached 10.7%, the highest in the period. In July it stood at 9.3%.

Why the ranking figure is different

The ranking uses the ex-ante real rate: the one-year DI rate minus the inflation the market expects over the next 12 months (4.71%, according to the Central Bank's Focus survey of market forecasts). The chart above uses the ex-post real rate: today's Selic minus the inflation that has already happened. The two measures tend to move together, but they answer different questions. The first says how much money costs from here on; the second, how much it has paid or cost so far.

Why so high

There is no single explanation, and economists disagree on the weight of each. Four are cited most often. The first is inflation expectations above the target: Focus projects 4.90% for 2026, against a target of 3%. The second is doubt about the trajectory of public debt, which leads investors to demand a larger premium. The third is directed and subsidized credit, which weakens the effect of the Selic on part of the economy and forces the Central Bank to raise the rate further. The fourth is the indexation of prices and contracts, which makes past inflation repeat itself.

The cost shows up everywhere. In public debt, in investment and, quite concretely, in household budgets. How much of income goes to paying debts is the subject of this piece.