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3mo ago

Brazil Central Bank Minutes Open Path to Rate Cuts While Keeping Cautious Stance

Lower inflation projected at 3.2% for Q2 2027 shifts expectations toward early‑2026 easing.

Sintonia técnica: encontro entre Gabriel Galípolo e Roberto Campos Neto no fim de 2024. Gestão atual manteve o rigor no combate à inflação, frustrando a ala política do governo.
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Overview

  • The December Copom minutes remove earlier constraints on policy changes and state that any move will depend on incoming data.
  • In the reference horizon, inflation is projected at 3.2% in Q2 2027, aligned with Focus forecasts for the Selic around 12.25% in 2026 and 10.5% in 2027.
  • Copom softens its labor‑market description from “dynamism” to “resilient,” pointing to early cooling that has helped temper services inflation.
  • Ex‑director Fabio Kanczuk says the bank is prepared to cut and forecasts a 0.25‑point reduction in January followed by 0.50 in March, contingent on the data.
  • Despite the softer tone, the minutes retain the prescription that monetary policy remains significantly contractionary for a prolonged period.