Lost horizon

BRAZIL ECONOMICS - Report 06 Aug 2026 by Alexandre Schwartsman, Cristina Pinotti and Diego Brandao

Once again, there was no surprise in the decision regarding the target for the Selic rate, which, we believe, may be an important part of the current monetary policy problem. The Monetary Policy Committee (Copom) reduced the benchmark interest rate by 0.25 p.p., to 14% per year, and “understands that this decision is compatible with the strategy of convergence of inflation to around the target over the relevant horizon.”

The statement that followed the meeting seemed to us far more dovish than the previous one, although it avoided the confusion that caused considerable unease after the June meeting. This suggests at least one further Selic reduction in the coming meetings, which would bring it to 13.75% per year by the end of 2026.

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