Central Bank of Brazil warns of predatory credit and discusses Selic cuts

Gabriel Galípolo, president of the Central Bank of Brazil, has raised concerns regarding aggressive and predatory credit offerings in the country. During a press conference regarding the Monetary Policy Report, Galípolo highlighted a critical delinquency rate of 65% in credit cards, describing the product as having a “design problem.” He advocated for increased transparency, preventive macroprudential measures, and consumer awareness to protect citizens from high-interest debt cycles.

Regarding monetary policy, the Monetary Policy Committee (Copom) recently reduced the Selic rate by 0.25 percentage points, from 14% to 13.75% per year. This decision was driven by decelerating inflation and economic activity, though the pace of cuts remains cautious due to geopolitical uncertainties, fiscal expansion risks, and a resilient labor market. Galípolo emphasized that the bank’s approach is data-dependent and seeks to avoid emotional reactions to individual data points to prevent market volatility.

Director Paulo Picchetti noted that while overall credit in Brazil is growing, the pace of new concessions is slowing as a direct result of current monetary policy. Projections suggest family credit could rise by 9.7% in 2026.