Brazil weekly: A complicated profession

Research evidence excerpt

Brazil weekly: A complicated profession

J P M O R G A N Latin America Economic Research

18 June 2026

Brazil weekly

A complicated profession

See our full research on Economics: Brazil EM, Economic and Policy Research

Cassiana Fernandez

• COPOM cut the policy rate by 25bp, as expected, raising the bar for more (55-11) 4950-3369

cuts cassiana.fernandez@jpmorgan.com

• Economic activity to decelerate in 2Q, led by a slowdown in consumption Vinicius Moreira

• Lula rises in the polls, with more economic measures likely to come (55-11)vinicius.moreira@jpmorgan.com4950-3195

• Next week: Meeting minutes, Monetary Policy Report, June CPI preview, Mirella Sampaio

and May labor market data (55-11) 4950-3289

mirella.sampaio@jpmorgan.com

Gustavo Ribeiro

(55-11) 4950-4059

This week, the attention was turned to how the central bank would react under gustavo.ribeiro@jpmorgan.com

pressure from resilient economic activity, inflation above the target and Banco J.P. Morgan S.A.

government stimulus. The BCB did deliver the 25bp cut priced by the market and

expected by us. While its projections for 4Q27, using the consensus Selic rate path,

are further deviating from the target, the BCB affirmed that the trajectory that

would deliver a 3% projection by 4Q27 would leave 1Q28 — the relevant horizon

at the next meeting — below the target. Against this backdrop, the Committee

deemed it appropriate to continue its calibration cycle "at this moment."

In the past, this wording has been associated with a potential moderation in the pace

of Selic changes ahead, leaving open the option of a pause in the cycle as soon as

the next meeting, in August. The Committee also described the economic outlook

in a more hawkish manner: it added a fourth upward factor to its balance of risks,