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Brazil finance minister Fernando Haddad says the Selic could fall 2.75‑3 pp to around 12%, citing faster‑than‑expected inflation slowdown and a near‑zero
Brazil’s finance minister Fernando Haddad said there is “room for rate cuts,” noting that the Selic benchmark rate could be trimmed by up to three percentage points to about 12% – a move the market already expects as inflation eases faster than projected [2][1].
| At a glance | |
|---|---|
| Selic rate | 15% (current) |
| Expected cut | 2.75‑3 pp to 12‑12.25% (market view) |
| IPCA inflation (Nov) | 3.92% YTD, 4.46% 12‑month, below 4.5% target |
| Fiscal balance (2022‑2025) | From –1.77% GDP deficit to near‑zero (structural) |
The extended consumer price index (IPCA) for November showed a 3.92% cumulative rise this year, well under the market’s early‑year projection of 5.6% and below the 4.5% ceiling of the central bank’s target band. On a 12‑month basis the index sits at 4.46%, also under the ceiling, indicating that price pressures have softened more quickly than the Central Bank anticipated [1].
Mello, the Finance Ministry’s economic policy secretary, highlighted that food‑at‑home prices are expected to finish the year around 2%, after a sharp rise in the previous twelve months, while underlying services inflation has fallen from near 9% at the start of the year to roughly 3.6%—close to the target level. These trends, together with a revised GDP estimate that shows services growth slowing, underpin the view that disinflation is progressing faster than expected [1].
Using a “cleaned” fiscal accounting method that strips extraordinary revenues and inflation effects, the ministry estimates the structural balance of the central government has moved from a 1.77% GDP deficit in 2022 to essentially breakeven today. This fiscal improvement, combined with a R$28 billion injection from a higher income‑tax exemption threshold and new housing‑credit measures, creates a more neutral macro environment that could accommodate a less restrictive monetary stance [1].
Haddad’s comments came after the Central Bank left the Selic unchanged for a third consecutive meeting, reinforcing the notion that the policy‑making space is widening. He echoed the market’s expectation of a 2.75‑3 pp cut, suggesting that a Selic around 12% would alter the yield curve and Brazil’s debt trajectory, even if the rate remains above the neutral level [2][1].
The convergence of faster‑than‑expected inflation decline, a tightening fiscal position and a stable Selic rate creates a plausible path for Brazil’s central bank to ease policy next year, but the exact timing will hinge on upcoming inflation and fiscal data.
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AI-assisted synthesis by the TrendWatcher Editorial Desk · sourced from 2 outlets · Jun 18, 2026 · How we report
The annual rate of inflation, as measured by the Consumer Price Index, was 3.4% in August 2026. This figure remained unchanged from the annual rate reported for July 2026.
Inflation is a primary factor for the Federal Reserve because the central bank maintains a 2% annual target for price increases. When inflation remains above this target, as it did in August 2026 at 3.4%, policymakers consider raising interest rates to help moderate economic price pressures.
Energy prices impact inflation by directly increasing the cost of goods and services, with gasoline price hikes accounting for over one-third of the total monthly index increase in August 2026. Rising costs for oil and diesel, influenced by geopolitical tensions in the Middle East, can also create broader inflationary pressure across other sectors of the economy.
Core inflation is different from overall inflation because it excludes volatile food and energy prices to provide a clearer view of long-term price trends. In August 2026, core inflation rose 2.4% annually, which was lower than the 3.4% headline inflation rate.