The Monetary Policy Committee’s decision to keep Brazil’s benchmark Selic rate at 13.75% has sharpened debate over what is keeping monetary policy restrictive. Both accounts point to deteriorating inflation expectations, uncertainty and softer credit-sensitive activity. But they assign different weight to the risks cited in the central bank’s minutes.

The right-focused account argues that the proposed end of the six-days-on, one-day-off work schedule could raise firms’ staffing and production costs, particularly in continuously operating sectors such as retail, hospitality, transport and essential services. It describes the change as a potential “supply shock,” arguing that businesses may pass some of the additional labor costs on to consumers and thereby add to inflationary pressure.¹

That account also puts fiscal policy at the center of the rate outlook, saying investors doubt whether the federal government can contain mandatory spending and stabilize public debt. In its view, high rates then compound the strain on households through more expensive credit, slower consumption and weaker investment.¹ Rodrigo Constantino amplified a reader’s argument that “the first step” toward meeting the fiscal target would be to lower rates and end the “party of rentiers,” framing the issue as a political critique of high interest rates.Rodrigo Constantino (Rconstantino)²

The left-focused account likewise notes the Copom’s concern about fiscal discipline, directed credit and uncertainty over debt stabilization. Yet it presents the end of the 6x1 schedule as one among several risks, alongside higher oil prices linked to Middle East conflicts, El Niño’s effects on agriculture and energy costs, and currency depreciation.³

It also stresses that the committee does not intend to respond automatically to the initial effects of such shocks, but will watch for broader, secondary effects on inflation. The minutes, as summarized in the account, call for fiscal and monetary policies that are “harmonious, predictable and capable of acting countercyclically.”³ Both perspectives therefore see a prolonged high-rate environment; their disagreement is chiefly over whether domestic fiscal and labor decisions, or a broader mix of domestic and external pressures, best explains it.