Brazil: Selic pause extended into 2027 – Societe Generale

Societe Generale reports the Banco Central do Brasil (BCB) has halted its five‑meeting easing cycle, leaving Selic at 13.75% amid post‑election volatility and fiscal uncertainty. Economist Dev Ashish now expects the policy rate to stay unchanged through 2Q27, with cuts resuming only once inflation expectations stabilise and fiscal visibility improves, implying around 100 bps of easing and a 12.75% Selic by end‑2027.

High rates maintained to rebuild credibility

"Elsewhere, the BCB left the Selic rate unchanged at 13.75% yesterday, bringing its five-meeting easing cycle to a halt in response to post-election market volatility and fiscal uncertainty."

"Policymakers acknowledged the more challenging inflation outlook but stopped short of validating market expectations for renewed tightening, opting instead to preserve flexibility."

"Despite weakening growth and still-restrictive real rates, the message was clear: restoring policy credibility takes priority."

"Our economist Dev Ashish now expects Selic rate to remain unchanged through 2Q27, with easing resuming only after inflation expectations stabilise and fiscal visibility improves, leaving scope for around 100bp of cuts in 2027 and an end-2027 Selic rate of 12.75%."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)