Market Lowers Interest Rate Forecasts Ahead of Copom Decision
2 sources · Brazil
Who reported this
- CNN Brasil
- Folha de S.Paulo
What the colours mean
- Left
- Centre-left
- Centre
- Centre-right
- Right
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Every source for this story reports from Brazil.
Every outlet covering this story shares the same political lean; read with that in mind.
Economists have reduced the year end forecast for the Selic basic interest rate to 13.75 percent, down from 14 percent in previous weeks, according to the latest Focus bulletin from the Central Bank. This marks the first reduction in the forecast since March. The revision comes just before the Monetary Policy Committee (Copom) meets this Wednesday to decide on the current rate, which stands at 14.25 percent. Most market participants expect a cut of 0.25 percentage points.
Inflation expectations also trended downward, with the IPCA forecast for the end of the year falling to 5.03 percent. This represents the fifth consecutive week of downward revisions for inflation. Meanwhile, GDP projections for the end of the year remained steady at 1.99 percent, though the forecast for 2027 was slightly lowered to 1.57 percent.
Financial markets showed volatility on Monday. The Ibovespa declined by approximately 0.5 percent, pressured by a drop in Petrobras shares. This decline is linked to a sharp fall in Brent crude oil, which traded around 83 dollars per barrel. The drop in oil prices follows statements from U.S. President Donald Trump regarding a pause in attacks on Iran to facilitate a deal to reopen the Strait of Hormuz and end Iranian nuclear ambitions. However, Iran has stated that no such negotiations are currently underway.
The U.S. dollar remained relatively stable, trading around 5.07 reais. Investors are monitoring the geopolitical situation in the Middle East and domestic political data, including a BTG/Nexus poll showing President Luiz Inácio Lula da Silva with 41 percent of voting intentions compared to 37 percent for Senator Flávio Bolsonaro.
How each side framed it
- Centre
- Outlets with a center lean focused on the technical data of the Focus report and the correlation between geopolitical tensions in the Middle East and Brazilian market volatility.
Sources
- Centre CNN Brasil: Market reduces forecast for interest rates in 2026 on the eve of Copom, says Focus
- Centre CNN Brasil: Dollar fluctuates and Ibovespa falls with Middle East in focus
- Centre Folha de S.Paulo: Economists reduce interest rate forecast for the first time since the start of the war in Iran
- Centre Folha de S.Paulo: Dollar opens near stability and Stock Market declines with Focus and Middle East on radar
100% of the statements in this article were traced back to the source articles listed above.