1. Central Bank maintains interest rate increase, assessing the scenario for inflation and challenging

Inflation is expected to remain above the target tolerance limit for the next six months, according to Brazil’s Central Bank Monetary Policy Committee (Copom). By maintaining inflation at this level, the Central Bank will be breaching the new continuous target regime, and the institution’s president will be required to formally justify the failure to meet the target to the Ministry of Finance as well as present corrective measures. The current expectation is for a 12-month accumulated inflation rate above 4.5%, while the central target is set at 3%.

Amid persistent adverse inflationary pressures including exchange rate fluctuations, rising food and service prices, and unanchored expectations, Copom indicated that the interest rate hike cycle may be extended. The Selic rate, currently at 13.25% per year, is expected to rise to 14.25% at the next meeting, with the possibility of further increases. The committee also noted early signs of economic slowdown, though not sufficient to ensure inflation converges to the target, reinforcing the need for a more restrictive monetary policy.

Exame: Copom não deve cumprir meta de inflação até junho e pode prolongar ciclo de alta de juros
O Globo: BC admite em ata do Copom que inflação pode estourar meta em junho

2. Federal public debt reaches R$ 7.3 trillion and may exceed R$ 8 trillion in 2025

Brazil’s federal public debt (DPF) closed 2024 at R$ 7.316 trillion, a 12.2% increase compared to the previous year, remaining within the range projected by the Annual Financing Plan (PAF). The National Treasury estimates that the total debt stock could reach between R$ 8.1 trillion and R$ 8.5 trillion by the end of 2025.

This year’s plan aims to increase the share of bonds indexed to the Selic rate to between 48% and 52%, reflecting the rise in the benchmark interest rate, currently at 13.25% per year. Meanwhile, fixed-rate bonds are expected to stabilize at around 22% to 26% of the total, while inflation-linked and exchange rate-linked securities should range between 25% to 29% and 3% to 7%, respectively. The average debt maturity is also expected to remain between 3.8 and 4.2 years, with up to 21% maturing within the next 12 months.

Estadão: Dívida pública federal sobe 12,2% e fecha 2024 em R$ 7,3 trilhões, aponta Tesouro Nacional
Agência Brasil: Dívida pública pode alcançar até R$ 8,5 trilhões em 2025

3. Franchise sector grows by 13.5% to reach R$ 273 billion in revenue in 2024

The franchise market recorded revenue of R$ 273.1 billion in 2024, a 13.5% increase compared to the previous year, according to data from the Brazilian Franchising Association (ABF). This growth was driven by consumer recovery, increased household purchasing power, and expansion into smaller cities, particularly in regions with strong agro-industrial activity. The sector also benefited from digitalization, enhanced omnichannel strategies, and a focus on operational efficiency.

The fastest growing segments included Entertainment & Leisure (16.6%), Health, Beauty & Wellness (16.5%), and Food (16.1%). The return to in-person consumption and the strengthening of delivery services contributed to the strong performance of the food sector, while entertainment thrived with new business models and the reopening of the economy. In the health and beauty sector, demand for specialized care, the expansion of aesthetic service networks, and advances in telemedicine played key roles. The franchise market also saw a slight increase in the number of units, reaching 197,700 operations and employing over 1.7 million workers.

PEGN: Franquias crescem 13,5% e faturam R$ 273 bilhões em 2024, diz ABF

4. Debt and default rates decline, but income commitment rises

The Consumer Debt and Default Survey (PEIC), released by the National Confederation of Commerce of Goods, Services, and Tourism (CNC), showed a slight decrease in the percentage of indebted and defaulting families in January. The debt rate dropped to 76.1%, lower than both December and the same month last year. Default rates also declined, with 29.1% of families reporting overdue debts, while the share of those unable to pay their obligations stood at 12.7%.

Despite these improvements, the portion of income committed to debt payments rose to 30%, the highest level in eight months. There was also an increase in debt perception, with 15.9% of respondents considering themselves “heavily indebted.” CNC warned that the situation could worsen throughout the year due to high interest rates and stricter credit conditions, projecting that the debt rate could reach 77.5% by December. Credit cards remained the primary source of debt, accounting for 83.9% of cases.

Valor: Endividamento e inadimplência caem em janeiro, diz CNC

5. January 2025 breaks global heat record, defying climate expectations

January 2025 was the hottest ever recorded for the period, with a global average temperature of 13.23°C to 1.75°C above the pre-industrial average, according to the European Union’s Copernicus Climate Change Service. This record is particularly significant as it occurred during the La Niña phenomenon, which typically cools global temperatures. It also marked the 18th of the past 19 months in which average temperatures exceeded the 1.5°C threshold.

Europe experienced its second-warmest January on record, although specific regions such as Iceland, the United Kingdom, and Scandinavia saw below-average temperatures. In the oceans, the average sea surface temperature reached 20.78°C, the second highest level ever recorded for January. Scientists warn that the frequency of these climate new records occurring is intensifying the frequency of extreme events, including heatwaves, heavy rainfall, and droughts, highlighting the ongoing impacts of global warming.

Valor: Janeiro de 2025 foi o mais quente já registrado para o período