WITH ITS INFLATION rate at 23 percent a month -- that's 1,200 percent a year -- Brazil has now desperately resorted once again to a price freeze. The Brazilian economy is a powerful engine with no governor. When it isn't racing, it starts coughing and sputtering. It can't seem to find a steady operating speed.

Or perhaps it's not a defect in the economy, but rather the nature of the country's political leadership. President Jose Sarney has finally done the essential thing. He has broken his much-repeated promise to the country that it would emerge from this inflation at no cost to anybody. It was an impossible promise, but breaking it is going to bring him more than the usual amount of grief. Brazil is now going to go through a real test of its political stability.

The conventional reason for Brazil-watching is the enormous debt to foreign banks, some of them here in the United States. But there's a much better reason to take a sharp interest: Brazil is now the world's tenth most powerful national economy, and sets the pace for all of South America, just as Germany sets it for Western Europe or Japan for the trading states of the East Asian rim.

Brazilians have learned to live with a high inflation rate, but nobody can live with one that keeps accelerating. When he first took office, Mr. Sarney waited too long before attacking inflation, 16 months ago, with his dramatic Cruzado Plan. When at last he did it, he flinched. While he imposed a temporary price freeze, he allowed a substantial rise in wages to go through. When the predictable strains developed, he insisted on postponing any remedy until after last fall's elections -- in which his party won heavily. Then he made a few adjustments but not, clearly, enough. Now the inflation rate has again forced him to take emergency action. This time, along with freezing prices, he has also gone after wages. No longer will they rise automatically with the inflation rate. Incomes are going to drop, and Mr. Sarney's popularity with them.

Brazil's foreign debts are a burden, but they are not the crucial element in its current distress. The government has made no payments to the foreign banks since last February. The immediate issue is the government's management of internal demand. That's less a matter of economics than of the Sarney government's political skill and stamina