Brazil weekly: Calibration continuity

Research evidence excerpt

Brazil weekly: Calibration continuity

AmericaBanco J.P. Morgan S.A. Latin Economic Research J P M O R G A N 31 July 2026Vinicius Moreira

(55-11) 4950-3195

vinicius.moreira@jpmorgan.com

reinforced that view. New loans grew in June, driven by a recovery in corporate lending, but

overall credit growth continues to decelerate following the sharp acceleration at the turn of

the year. Similarly, job growth continued to slow — partly reflecting constraints on labor

supply — with wage growth also decelerating in June (Figure 2). Next week’s industrial

production report, for which we expect a 0.7% m/m sa decline, should be the first hard activity

reading available to reinforce that weakness last month.

Figure 2: Job, credit and economic growth

%3m/3m, saar

Job growth IBC-Br ex. agro

10 20 New loans (RHS)

5 10

0 0

-5

-5 -10

24 25 26

Source: IBGE, BCB and J.P. Morgan

Initial readings for July indicate that the softness in economic growth has extended into this

month. Sentiment readings from both consumers and businesses were generally soft, with a

marked decline in the services sector (Figure 3). Partial coincident indicators also suggest a

decline in July following the expected contraction in June.

Figure 3: Business and consumer confidence (FGV)

Construction

Diffusion index, deviation from historical average Services

Manufacturing 5

Consumer

Retail

-10

2025 2026 2027

Source: FGV and J.P. Morgan

The activity readings through July and inflation numbers through August are the data the

BCB should have in hand by its September meeting. Barring a tightening in global financial

conditions with material effects on the exchange rate, a renewed escalation in the Middle East

conflict with consequences for global prices, or a sharp increase in medium-term inflation