Inflation nutters
Mervyn King, the former Governor of the Bank of England, referred to those central banks who focused solely on inflation targeting as "inflation nutters". They should take other things into account: growth, employment and so on. The central bank of Brazil, after its increase in interest rates to 15% is in the inflation nutter camp.
Brazil’s central bank was made independent as recently as February 2021. It set a great example to other economies in raising interest rates early in the 2021-2023 global tightening cycle. Notably, it started raising rates in March 2021, a year before the US Fed. By the time Brazilian consumer price inflation peaked at over 12% in April 2022, the policy interest rate had reached 11.75% and went even higher (see chart).
By January 2024, inflation was (just) inside the target range (3% +/- 1.5%). The first cut in interest rates had already been made and interest rates fell to 10.5% in December.
Subsequently, as concern a resurgence in inflation grew, those rate reductions were more than reversed with the policy rate reaching 15% in June 2025.
Nervousness about inflation is understandable. As recently as the 1990s, Brazil had two episodes of hyperinflation (over 5,000% p.a., a rate of 8% per day).
But, most likely, 15% interest rates do indicate overkill.
The IMF’s latest forecast sees inflation dropping to 4.0% in 2026. It's impossible to say if 15% interest rates were needed to get there. But I very much doubt it.