Block-based, low latency rate control for an encoding system in which a wavelet transform decomposes pixel blocks into subbands stored as subbands in wavelet blocks (WBs) for encoding. Quantization parameters (QPs) for the subbands in each WB are estimated using a method that minimizes wavelet-inverse distortion given a rate bound. For each subband, a rate curve is generated based on an unquantized DCT histogram and bit count statistics for the subband, and a distortion curve is generated based on the unquantized DCT histogram and a distortion estimate for the subband that is estimated using a masked estimator. Once the rate-distortion curves for the subbands are generated, a bisection search may be used to find a point on each curve where the slope is the same for all the curves. The QPs associated with those equally sloped points are the global minimizing QPs for the wavelet block.