Brazil: COPOM minutes support another 25bp cut

Research evidence excerpt

J P M O R G A N

Latin America Economic Research

11 August 2026

Brazil

COPOM minutes support another 25bp cut

The main message of today’s minutes—as in last week’s statement—is that the

BCB will keep upcoming decisions data-dependent. This remains consistent with

our call for a 25bp cut at the next meeting, as recent and forthcoming data should

remain soft. Note that even with today’s July CPI coming in about 10bp above our

most recent expectations, it was still almost 20bp below the BCB’s projection at

the time of the 2Q Monetary Policy Report. Beyond the September meeting, we

think the data will make it more challenging for a continuation of the calibration

cycle. Following that final cut, we anticipate a pause until April next year, when

we expect the BCB to resume calibration—a view that depends importantly on the

fiscal policy stance next year.

The minutes’ characterization of recent developments reads as more constructive

for the disinflation process than the details provided in last week’s statement. The

Committee pointed to increasing evidence that monetary policy is gaining traction:

growth is moderating broadly as expected, with weakness becoming more

widespread from 1Q to 2Q. While the labor market is still described as tight, the

BCB highlighted evidence of a deceleration in job and wage growth. The BCB also

acknowledged better inflation readings, particularly in core metrics, while

balancing the recent data against the view that demand-side pressures still warrant

a restrictive policy stance. In this context, the Committee continued to emphasize

that it is following the data as it calibrates and refines its assessment of the impact

of government measures to stimulate demand and of recent supply shocks.

What continues to concern the BCB, echoing last week’s statement, is the deanchoring of inflation expectations, which the Board said it is monitoring closely.

In our view, a further rise in inflation expectations is one of the main risks that could

lead the BCB to keep rates on hold at the next meeting. However, in this week’s

minutes the BCB attenuated this concern by emphasizing not only the role of

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