According to a report by InfoMoney, the Brazilian monetary policy council is likely to maintain Selic at 15% this Wednesday. This was based on XP’s pre-Copom study.
Survey of 25 managers from macro-multimarkets also revealed that they expect the US Federal Reserve to cut their benchmark rate by 25 base points. This highlights the difference between Brazil’s strict stance on interest rates and the United States gradual easing cycle.
Although no changes are expected in the near future, long-term perspectives have shifted.
The survey revealed that managers lowered their Selic year-end projection for 2026 to 12,25%, down from 12.6%.
Changes in currency exchange rates favor the Real
In XP’s survey of September, 68% of respondents reported long positions in Brazilian reals, up from the 41% of the previous poll.
This shift is a reflection of the expectation that dollar strength will continue to decline against emerging market currencies.
XP stated that the rise was due to both domestic and global factors including loosening US monetary policies and modest improvement in Brazil’s economy outlook.
Only 18% of managers have a pessimistic view about the local economy, down from 73% back in March.
Fed eases cycle to next stage
Federal Reserve increased interest rates from 5.25% to 5.50%, a level not seen in two decades.
The federal funds rate ranges from 4.25% – 4.50% since December.
The markets expect a further 25 basis points to be cut on Wednesday. However, the pace and amount in 2025 is still uncertain.
According to XP’s analysis, US policy reforms will have a positive impact on the global economy, including lowering the risk of the world, increasing investor interest in riskier assets and favourable changes for emerging market currencies like the real.
Data on the labour market has strengthened Fed’s argument for ease.
The August employment figures reported only 22,000 new positions, far below the projections of 75,000.
The central bank has more room to relax policy by reducing wage pressure.
The outlook for inflation and economic growth is improving
Inflation forecasts are also trending downward in the survey.
In January, the IPCA projection was 5.71%. It increased to 5.75% by March, before decreasing each month until it reached 4.79% by September. This is the lowest estimate of 2025 but still higher than the official target of 3%.
Managers now anticipate that the GDP will grow by 2.28% between 2025 and 2028, a slight decrease from the prior survey’s 2.35% but higher than January’s 2.06%.
XP stated that the easing of exchange rate pressures and resilience in external activities are helping to contain inflation expectations.
As new information becomes available, this post Brazil to hold rates while US Fed is expected to cut 25 basis points may be updated.
This site is for entertainment only. Click here to read more
