USD/BRL: Markets weigh Selic path and inflows – Societe Generale

Societe Generale’s LatAm strategists describe money markets pricing a 50 bp Selic cut in March, while their economist Dev Ashish expects a smaller 25 bp move as the BCB remains cautious on inflation. USD/BRL has slipped below 5.20, supported by strong real yields, commodity and equity optimism, and sizeable foreign investment inflows highlighted by President Lula.

BCB caution versus market cut expectations

"In LatAm, the money markets have moved decisively towards a 50bp Selic rate cut by the BCB in March."

"BCB president Galipolo yesterday however hinted at a potentially smaller move to start the cycle, saying that the policymakers will calibrate interest rate cuts cautiously due to above-target inflation forecasts and resilient economy."

"Our economist Dev Ashish has currently pencilled 25bp cut by the BCB to start with and his headline CPI forecast is in line with consensus at 4.43%."

"USD/BRL is back below 5.20 as optimism over commodities/local stocks and double digit positive real yield offers cushion to the BRL."

"He also stressed that foreign investment inflows into Brazil rose to BRL26.31bn in January, exceeding the total foreign inflows recorded during all of 2025, totalling BRL25.47bn."

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