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Brazil: Selic Cut, But Staying Restrictive

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<ul>
<li>Copom only cut the Selic by 25bp to 14.75% (consensus 14.5%), starting a cautious calibration cycle rather than a pre‑set easing path amid still excessive inflation expectations.</li>
<li>Future rate moves hinge on expectations re‑anchoring, services inflation and labour‑market slack, plus the credibility of Brazil’s evolving fiscal stance.</li>
<li>External shocks from the Middle East and commodity prices may quickly reshape the easing path, keeping a high bar for aggressive Selic cuts.</li>
</ul>


Copom only cut the Selic by 25bp to 14.75% (consensus 14.5%), starting a cautious calibration cycle rather than a pre‑set easing path amid still excessive inflation expectations.
Future rate moves hinge on expectations re‑anchoring, services inflation and labour‑market slack, plus the credibility of Brazil’s evolving fiscal stance.
External shocks from the Middle East and commodity prices may quickly reshape the easing path, keeping a high bar for aggressive Selic cuts.


Brazil: Cautious Start to Selic Easing