High rates split Brazil into two economies: credit-sensitive vs. resilient

Brazil's elevated interest rates are bifurcating the economy into two distinct segments: one highly sensitive to credit costs (consumers, small firms) and another more insulated (commodity exporters, large corporates). The divergence complicates monetary policy, as rate cuts to support the weak segment risk fueling inflation in the strong one. This structural split is a key risk for growth and policy calibration.