Banco Central do Brasil (BCB) has paused its five‑meeting easing cycle, keeping the Selic rate at 13.75% following post‑election market volatility and fiscal uncertainty. Policymakers described a tougher inflation outlook while declining to endorse market pricing for renewed tightening, instead keeping their options open.
Policy Stance and Market Context
The bank’s communication placed the emphasis on policy credibility even as growth weakens and real rates remain restrictive.
Forward Guidance and Rate Expectations
Expectations now centre on an extended hold, with the Selic seen staying unchanged through 2Q27 and cuts resuming only once inflation expectations stabilise and fiscal visibility improves. That path implies about 100 bps of easing during 2027, taking the Selic to 12.75% by end‑2027.
