By Gabriel Burin
BUENOS AIRES (Reuters) -Brazil’s central bank will hold its benchmark interest rate at a two-decade high of 15% on July 30, according to a unanimous Reuters poll, although economists said it could acknowledge some moderation of inflation expectations.
At last month’s meeting, the bank unexpectedly raised the Selic interest rate by 25 basis points but signaled a “very prolonged pause” would follow.
The monetary policy committee, known as Copom, decided to wait for its tightening drive to take effect after hiking rates by a cumulative 450 basis points since August.
Private economists polled by Banco Central do Brasil (BCB) trimmed their 2026 inflation outlook for the first time in more than two months.
After that tentative sign of success, the BCB is set to keep the Selic rate at 15% at its meeting next week, according to all 35 analysts polled by Reuters over July 21-25.
All 30 participants who responded to an extra question on Copom’s next move said they expected a rate cut, consistent with the economy shifting to a lower gear.
Seven expected a reduction in December, eight in January and another seven in March, with the remainder choosing other months. Of the 29 who indicated the size of the cut, 17 expected 50 basis points and 12 a quarter-percentage point.
“The decline in expectations is an important factor in the BCB’s decision, but they remain at a very uncomfortable level,” said Tomas Goulart, economist at Novus Capital.
“Copom may recognize the beginning of an improvement, though emphasizing that expectations remain well above target.”
In the central bank’s survey, the 2026 consensus inflation estimate was lowered by 5 basis points to 4.45%, just inside the target of 3.0% plus/minus 1.5 percentage points.
A separate Reuters poll forecast the median estimate for next year’s inflation easing to 4.4%, from 4.5% in April’s survey.
Official data showed monthly inflation slowed for the fourth time in a row in June, despite a small increase in the annual rate.
Brazil’s leading activity indicator also dropped in May, supporting the central bank’s view of a controlled economic slowdown under way.
Copom is expected to repeat its warnings about inflationary pressure from Brazil’s difficult fiscal situation, combined now with the threat of U.S. tariffs.
The bank “will still be concerned about the unanchoring of medium-term expectations and that there are doubts about the magnitude of the economic slowdown ahead,” said Robson Pereira, chief economist at Brasilprev.
(Other stories from the Reuters global economic poll)
(Reporting and polling by Gabriel Burin in Buenos Aires; Editing by Ross Finley, Kirsten Donovan)
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