Brazil holds Selic at 13.75% as Australia lifts its cash rate to 4.85%

Brazil's central bank surprised markets by pausing, while the Reserve Bank of Australia raised rates for a fifth time in 2026. Both decisions follow months of energy-driven inflation pressure tied to the Middle East conflict.

What happened

Brazil's monetary policy committee, Copom, unanimously kept the Selic at 13.75% per year on 4 November. Markets had expected a 0.25 percentage point cut [1]. The central bank pointed to wider uncertainties, inflation expectations above target, currency tensions, El Niño and spillovers from the Middle East war [1]. Twelve-month IPCA inflation rose to 4.62%, above the 4.5% ceiling, and the Focus survey sees year-end inflation at 5.22% [1].

On 3 November the Reserve Bank of Australia raised its cash rate by 25 basis points to 4.85%. That is the highest since November 2008 and the fifth increase of 2026 [2]. The board split, with six members voting for the hike and three for a hold, which matched the expectations of economists polled by Reuters [2]. September CPI rose 4.3%. The RBA expects inflation to stay elevated through much of 2027 and not to return to the 2%-3% target until late 2027, citing fuel, commodities and AI-driven technology goods prices [2]. Growth slowed to 2.1% year on year in the June quarter. Governor Bullock said recession is not the base case but that further hikes are possible if needed [2].

FinUties' news monitor logged 9 reports on this story from 7 outlets in recent days, and 98 earlier related reports going back to 9 December 2025.

How we got here

The Australian tightening has run for most of the year. On 29 April, Australia reported first-quarter inflation of 4.09%, below the 4.2% forecast but the highest in over two years. Governor Bullock signalled rates might rise further [3]. On 5 May the RBA raised its policy rate to 4.35%, the highest since December 2024. The bank blamed elevated inflation in the second half of 2025 and sharply higher fuel and commodity prices from the Middle East conflict [4]. By 3 June, first-quarter GDP growth of 2.5% had missed the 2.6% consensus. The conflict had halted oil flows through the Strait of Hormuz, and the RBA had responded with three hikes that year [5].

On 29 September the RBA lifted the rate by 25 basis points to 4.6%, a 15-year high, in a widely expected move. It cited a broadening conflict, higher global energy prices than assumed and AI-driven price pressure on technology goods [6]. Governor Bullock also pointed to a major energy supply shock, record technology investment and prior excess demand [7]. Economists noted that such hikes weigh disproportionately on mortgage holders and may not fix supply-side drivers such as war-related fuel costs [7]. The 3 November move added another 25 basis points to that path, taking the rate from 4.6% to 4.85% [2][6]. What changed is that the central bank now expects inflation to persist into late 2027, while growth has slowed from 2.5% in the first quarter to 2.1% in the second [2][6].

Other central banks faced the same energy shock. On 11 June the ECB raised its three key rates by 25 basis points. It projected 2026 headline inflation at 3.0% and cut its 2026 growth forecast to 0.8%, and it said it had no pre-committed rate path [8]. On 28 October the Bank of Canada raised its rate by 25 basis points to 2.5%, its first increase in over three years [9]. Ahead of that decision, Canadian inflation data showed a 57.8% surge in fuel oil and a 27.8% rise in gasoline, tied to Middle East disruptions [10]. The BoC lifted its 2027 inflation forecast to 3.1%, warned that more hikes may be needed and said it would proceed carefully given US trade and Middle East uncertainties [9].

Against that backdrop, Brazil's pause stands apart. The market had expected a cut, and Copom instead stayed put as inflation moved further above its ceiling [1].

Why it matters for markets

The Brazilian decision could matter for interest-rate expectations. Markets had expected a cut, so a unanimous hold would imply that the easing path is less certain than assumed [1]. The central bank's reference to currency tensions suggests the exchange rate could influence future decisions [1]. If inflation expectations stay above target, as the Focus survey implies, a prolonged hold could follow. That is a possibility, not something the central bank has announced [1].

The Australian hike was in line with expectations, so the surprise element was limited [2]. Higher borrowing costs could continue to press on mortgage holders and slow growth that has already eased to 2.1% [2][7]. Whether that cools inflation would depend on how much of the price pressure comes from energy and technology goods, which rate rises may not directly address [7].

For US rates, Treasury yields have moved lower over the past month. The 2-year yield was 4.59% on 2 November versus 4.84% on 5 October, and the 10-year yield was 4.91% versus 5.31% [11][12]. It is not known whether those moves relate to the Brazilian or Australian decisions.

What to watch

• Whether Copom's next communications say more about when easing could resume, and how it weighs currency tensions, El Niño and war spillovers [1].
• Brazil's next IPCA readings against the 4.5% ceiling, and whether the Focus year-end estimate of 5.22% moves [1].
• Whether the RBA follows through on its stated openness to further hikes, and how inflation and growth data compare with its expectation that inflation will not return to target until late 2027 [2].
• Further signs of how the Middle East conflict affects energy prices, since the RBA, ECB and Bank of Canada have each cited it as a driver of inflation [4][8][9].
• How the Bank of Canada's careful approach, with growth projected at 1% in 2026 and Q4 slowing to 0.8%, interacts with any additional hikes it flags [9].

Sources

1. Feed Últimas: Banco Central surpreende e mantém juros básicos em 13,75% ao ano, 04 Nov 2026
2. US Top News and Analysis: Australia hikes rates to 18-year high to fight inflation, 03 Nov 2026
3. US Top News and Analysis: Australia reports lower-than-expected first-quarter inflation — but price rise highest in 2 years, 29 Apr 2026
4. US Top News and Analysis: Australia central bank raises rates to highest since 2024 as inflation stays elevated, 05 May 2026
5. US Top News and Analysis: Australia's first-quarter economic growth misses estimates on severe weather, weak demand, 03 Jun 2026
6. US Top News and Analysis: Australia raises benchmark rates to 15-year high as it fights sticky inflation, 29 Sep 2026
7. Top Stories: Borrowers again 'hit over the head' to bring inflation down, 29 Sep 2026
8. ECB: Christine Lagarde, Boris Vujčić: Monetary policy statement, 11 Jun 2026
9. Al Jazeera: Bank of Canada raises interest rates for the first time in three years, 28 Oct 2026
10. Oilprice.com: Canada's Inflation Rises to 3.1% as Fuel Oil Prices Jump 58%, 19 Oct 2026
11. Federal Reserve H.15: US 2-year Treasury yield (H.15), 02 Nov 2026
12. Federal Reserve H.15: US 10-year Treasury yield (H.15), 02 Nov 2026

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Provenance

• Study: event-desk-20261104-brazil-holds-selic-at-13-75-as-australia-lifts-its-cash-rate (bdcbaa4d-4c68-4d57-b9f8-fcae757e9403)
• Author: FinUties Research
• Approved by: FinUties Research at 2026-11-04T22:50:25.522184Z
• Kind: event brief (news sources, not a FinUties dataset study)
• Cited sources: 12 from 7 outlets, all licensed for public use

• Earlier related events cited from 2026-04-29

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