# Brazil finance minister says room for Selic rate cuts

**Published:** 2026-06-18T12:49:22.590Z  
**Topic:** Inflation  
**Sentiment:** neutral  
**Publisher:** TrendWatcher — https://www.trendwatcher.in/article/f6b252b3-2836-4286-a8f1-754347aa6597

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) |

## Inflation and fiscal backdrop

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].

## Fiscal recovery and policy implications

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].

## What to watch
- **Central Bank meeting**: The next Selic decision, scheduled for early 2026, will test whether the market’s anticipated cut materialises.  
- **IPCA releases**: Monthly inflation data in the coming weeks will confirm if the disinflation trend holds, especially food‑price dynamics.  
- **Fiscal balance updates**: Revised government accounts for 2024‑25 will indicate whether the near‑zero structural balance is sustainable.

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.

## Sources
1. Valorinternational — [Finance Ministry sees room for ‘significant’ interest rate cuts](https://valorinternational.globo.com/markets/news/2025/12/15/finance-ministry-sees-room-for-significant-interest-rate-cuts.ghtml)
2. Ktwb — [Brazil Finance Minister says room for rate cuts, cenbank ...](https://ktwb.com/2025/11/10/brazil-finance-minister-says-room-for-rate-cuts-cenbank-chief-doing-good-job/)

---
Cite as: TrendWatcher, "Brazil finance minister says room for Selic rate cuts", https://www.trendwatcher.in/article/f6b252b3-2836-4286-a8f1-754347aa6597