In June 2025, the SELIC rate reached 15% per year, the highest level since July 2006. This increase directly impacted the cost of servicing Brazil’s public debt, which in March 2024 accounted for 8.28% of the national Gross Domestic Product (GDP).
On March 20, 2024, the Central Bank promoted a reduction of the SELIC rate, lowering it from 15% to 14.75% per year. However, this is the second consecutive drop in a short period, as the first reduction occurred in May 2024, when the rate fell from 10.75% to 10.50% per year.
Since February 2022, the SELIC rate has remained above 10% per year for four consecutive years, reflecting a scenario of high interest rates maintained since the 1990s. This situation makes it difficult to reduce the financial cost of public debt, which consists of bonds with remuneration linked to the basic interest rate, the IPCA (Broad National Consumer Price Index), and fixed rates.
The increase in the basic rate raises the cost of rolling over public bonds, pressuring the federal budget. Thus, interest payments appear as one of the government’s largest expenses, alongside social security spending. However, this high expenditure limits the public administration’s ability to invest in essential areas for the population, such as health, education, and infrastructure.
Finally, Brazilian monetary policy continues to face the challenge of balancing inflation control with the impact of interest rates on fiscal sustainability. The scenario of high interest rates further pressures public finances, demanding attention from managers for debt management and future conduct of interest rates.
Economic and Social Impacts of the Interest Rate in Brazil
Brazil has dealt for decades with one of the highest real interest rates in the world, a situation that directly affects the population’s access to basic needs. Generally, this scenario especially limits social investments and public policies aimed at improving the quality of life in the country. Furthermore, high interest rates hinder meeting the population’s immediate demands, which ends up facing constant financial restrictions.
Meanwhile, the public sector faces growing difficulty in honoring its social obligations due to the weight of the debt and financial costs arising from high interest rates. Consequently, public indebtedness is conditioned by the prevailing rate value, which compromises the execution of fundamental social programs. On the other hand, maintaining the high Selic is influenced by external factors, such as the conflict between the United States, Israel, and Iran, which generates international instability and pressures the Central Bank.
In general, the impact of high interest rates goes beyond public debt, as it also interferes with the country’s macroeconomic dynamics. For example, financial costs affect exchange rates and limit real wage growth, worsening the population’s economic situation. Still, unlike inflation, the scenario of high interest rates has not provoked expressive social reactions, even with the limitations imposed on families and consumption.
Moreover, the discussion about reducing interest rates has gained importance in upcoming elections, as it represents one of the main challenges to ensure greater balance in public accounts and expansion of social investments. The state’s default on social demands tends to grow if the rate remains at the current level, further compromising the government’s capacity to respond to the population’s needs.
The conclusion of the process still depends on the economic situation and decisions by the Central Bank, which must evaluate the internal and external scenario before modifying monetary policy. Besides domestic analysis, the international context will continue to be decisive for decisions about the interest rate, especially due to geopolitical conflicts and their economic consequences.
