BRASILIA, June 30 (Reuters) – Brazilian private economists anticipate that the central bank will initiate interest rate cuts starting next January, even though policymakers have emphasized that borrowing costs will remain stable for a “very prolonged” period to maintain inflation targeting, according to a survey released on Monday.
The central bank’s weekly survey indicates that economists predict the benchmark Selic rate will stay at 15% until December, before decreasing to 14.75% in January.
Sign up here.
Earlier this month, policymakers increased the Selic rate by 25 basis points to its current level, accumulating a total tightening of 450 basis points since September, and indicated a pause at the next meeting in late July.
Following this increase, the median forecast in the survey shifted to a 25-basis-point reduction in January, with the Selic rate projected to end 2026 at 12.50%. This outlook remained unchanged on Monday.
Diogo Guillen, the central bank’s economic policy director, stressed on Friday that any discussion about rate cuts is premature.
The latest survey also revealed that the expected inflation rate for 2025 has decreased for the fifth consecutive week to 5.20%, while projections for subsequent years remain above the official target of 3%, which has a 1.5-point tolerance range on either side.
In recent speeches, central bank Governor Gabriel Galipolo and Guillen reiterated their commitment to achieving the 3% inflation target over the “relevant horizon” – the 18-month period influenced by current policy decisions.
Policymakers have indicated a rate pause despite projecting inflation at 3.6% over that horizon.
That forecast was based on market expectations that the Selic rate would remain steady at 14.75% until January 2026 – a more dovish path than what has been realized.
Galipolo and Guillen added that inflation is still expected to align with the central bank’s target under alternative, undisclosed rate paths.
Reporting by Marcela Ayres; Editing by Louise Heavens and Paul Simao
— news from Reuters