Brazil’s Central Bank Poised for Fourth Straight Rate Cut on August 5

The Monetary Policy Committee (Copom) is scheduled to meet on August 5 and is expected to lower the benchmark Selic rate by a quarter-point to 14.00%. This would mark the fourth successive cut since the start of 2026, bringing the rate down from a near-two-decade high of 15% to the current 14.25% after three prior 25-basis-point reductions.

Reuters

Analysts surveyed on July 27 projected a 38-to-42 consensus for a cut to 14.00%, with four respondents anticipating the rate to hold at 14.25%. The poll also showed that roughly half of those answering an extra question expected a fifth consecutive 25-basis-point cut in September, while a minority saw the next move in January or later months.

Reuters

Brazil’s economy is growing modestly, and the labor market remains resilient, but inflation stays above the central bank’s 3.0% target. Myria Bast, deputy chief economist at Banco Bradesco, argued that a September cut would be justified because the inflation outlook improved as the impact of the initial oil-price shock from the U.S.–Israeli war with Iran wanes.

Reuters

They cited de-anchored expectations, upcoming fiscal expansion ahead of the October presidential election, and sustained economic activity as reasons the bank might keep rates unchanged this week.

Reuters

• “Our call is based on the worrisome dynamic of inflation expectations, which continue to de-anchor from the 3.0% target for longer horizons - 2027-2028 - despite the recent lower-than-expected inflation prints,” — Citi

Reuters