Economists polled by Reuters unanimously expect a third consecutive 25-bp Selic cut as inflation persists above target. The gradual easing keeps the carry trade intact but leaves the real sensitive to any signal of acceleration.
Alpha Score of 65 reflects moderate overall profile with strong momentum, strong value, weak quality, moderate sentiment.
Brazil's central bank is expected to deliver a third consecutive 25-basis-point rate cut on Wednesday, a Reuters poll of economists showed, as policymakers continue to unwind borrowing costs from near two-decade highs while inflation remains above target.
The Selic currently stands at 14.25% after two quarter-point reductions in May and April. The poll, which surveyed 37 economists, found a unanimous forecast for the cut this week. A majority also expected the bank to maintain the same pace at subsequent meetings, with the Selic ending the year at 12.75%.
The decision comes amid persistent price pressures. Brazil's annual inflation rate has remained above the 3% midpoint of the central bank's tolerance range, running at roughly 4% in recent months. That has kept the bank cautious as it shifts from the aggressive tightening cycle that pushed the Selic to a two-decade high of 14.75% in 2023.
For the real, the gradual easing path means the carry trade remains attractive, even as the yield advantage narrows. The currency has strengthened against the dollar this year, supported by high real interest rates and strong commodity exports. A 25-bp cut this week is unlikely to shift that calculus meaningfully, traders said. The bigger question is whether the bank signals that the pace could accelerate later this year, which would pressure the real lower.
Inflation expectations, as measured by the central bank's weekly Focus survey, have edged up in recent weeks, complicating the outlook. Economists polled by the central bank this month raised their 2024 inflation forecast to 4% from 3.9%. That suggests the bank will hold a cautious tone in its statement Wednesday, keeping the door open for further 25-bp moves rather than front-loading cuts.
The next monthly inflation print, due July 5, will provide fresh data before the August meeting. A surprise to the upside could delay the pace, while a softer reading might set up a potential 50-bp cut later in the year. For now, the market is pricing in a steady hand.
The decision is due Wednesday afternoon, following the central bank's two-day meeting.
Prepared with AlphaScala research tooling and grounded in primary market data: live prices, fundamentals, SEC filings, hedge-fund holdings, and insider activity. Each story is checked against AlphaScala publishing rules before release. Educational coverage, not personalized advice.