BRASILIA (Reuters) -Brazil’s central bank said on Tuesday that recent economic developments evolving as expected have reinforced its view that the current 15% benchmark rate is adequate to bring inflation back to the 3% target.

“The committee proceeds with the stage in which it opts to keep the rate unchanged for a very prolonged period, but with greater confidence that the current rate is enough to ensure the convergence of inflation to the target,” it said.

The message was conveyed in the minutes of its latest policy meeting last week, when it kept the Selic rate steady for the third straight time at a near 20-year high.

The decision came during a sharper decline in market inflation expectations and clearer signs of a slowdown in Latin America’s largest economy.

However, the bank stressed in the minutes that services inflation remains resilient, driven by a still-strong labor market. Despite a downward trend in inflation expectations, they remain above target across all horizons, it added.

“Perseverance, determination, and serenity in the conduct of monetary policy will support the continuation of this movement, which is crucial for the convergence of inflation to the target at a lower cost,” it wrote.

The bank said it had included a preliminary estimate of the impact of the government’s measure expanding income tax exemptions in its inflation forecasts, while stressing the effect remains “highly uncertain” and will be monitored.

Congress recently approved the higher exemption, a key pledge by President Luiz Inacio Lula da Silva ahead of the 2026 elections, which analysts warn could fuel inflation.

The central bank said it chose to maintain “a conservative and data-dependent stance,” reinforced by recent fiscal and credit measures that were initially expected to cause deviations from projections but ultimately did not.