The central bank, as expected, kept the key Selic rate at 14.25 percent, where it has been pegged for a year to support the flailing economy.
The meeting of the Central Bank Monetary Policy Committee (Copom) was the first one headed by the new market-friendly central bank governor, Ilan Goldfajn. Goldfajn has made reining in spiraling prices his top priority.
Markets expect the central bank to cut the Selic rate by a full percentage point by the end of the year.
Copom has kept the rate unchanged for eight consecutive sessions. The last rate hike was in July 2015.
Latin America's biggest economy has been in recession since the second quarter of 2015. The three main credit rating agencies have lowered their Brazil rating to junk status.
The central bank expects prices will head lower through next year to below its 6.5 percent inflation ceiling target. It forecasts an inflation rate of 6.9 percent this year and 4.7 percent in 2017.
Brazil has been hit hard by a worldwide slump in oil and other commodity prices, as well as the fallout from a massive corruption scandal centered on state oil company Petrobras and political paralysis as opponents of suspended president Dilma Rousseff seek her impeachment.
Goldfajn was appointed by the country's new interim president Michel Temer.