Brazil's Central Bank Set to Deliver Third Consecutive 25-Basis-Point Rate Cut

• Brazil's central bank is expected to deliver a third consecutive 25-basis-point interest rate cut on Wednesday, June 17, according to a Reuters poll of economists. This lowers the benchmark Selic rate to 14.25% as policymakers gradually unwind borrowing costs from near two-decade highs while contending with persistent inflation pressures. The monetary policy committee, known as Copom, began a moderate easing cycle in March after holding the cost of borrowing at 15.0% through the second half of 2025.
• Of 45 economists polled between June 12 and June 15, 41 expect a quarter-point cut while four anticipate no change. “The committee's communication between meetings is consistent with a further reduction in the Selic rate at a similar pace,” said Joao Savignon, head of macroeconomic research at Kinitro Capital. However, he noted the overall planning of the cycle had become more uncertain. Policymakers are likely to retain a cautious tone given persistent consumer-price pressure.
• Annual inflation in Latin America's largest economy accelerated to 4.72% in May from 4.39% in April, drifting further above the central bank's 3% target, which carries a tolerance band of 1.5 percentage points on either side. The El Niño weather pattern has emerged as an additional inflation concern, BTG Pactual economists noted, warning that with some further unanchoring of expectations “the scope for interest rate cuts this year becomes virtually nil.”
• Nearly two-thirds of poll participants who answered an additional question, 19 of 31, expect another 25-basis-point cut at the next meeting in August. Median quarterly forecasts point to the Selic ending 2026 at 13.75% and closing 2027 at 12.00%, broadly in line with consensus views from the central bank's weekly survey of economists.

(Source: Reuters)