Will the Central Bank of Brazil Cut 25bps at the August Monetary Policy Meeting?

As of June 26, 2026, the Central Bank of Brazil (BCB) Monetary Policy Committee (Copom) has cut rates by 25 basis points at three consecutive meetings (in March, April, and June), bringing the benchmark Selic rate to 14.25%. The Copom minutes released on June 23 emphasized that despite persistent inflationary pressures and external uncertainties, the previous tightening policy has gradually slowed economic activity, and the central bank tends to maintain a gradual (25 basis point) easing pace. Mainstream market surveys (such as the Focus weekly report) and B3 derivatives market pricing are highly consistent in expecting Copom to continue cutting rates by 25 basis points to 14.00% at the August 4-5 meeting.

Based on information as of June 26, 2026, the Central Bank of Brazil has cut interest rates by 25 basis points three times in a row, and the market generally expects the August meeting to continue cutting rates by 25 basis points to 14.00%. Inflation continues to slow and economic growth is moderate, supporting the central bank to continue its cautious rate cut cycle.

As of June 26, 2026, the Central Bank of Brazil has cut interest rates by 25 basis points in each of its last three meetings in March, April, and June, with the Selic rate lowered to 14.25% on June 17, and the decision was unanimous. The committee did not provide forward guidance, emphasizing 'calm and caution' and data dependence, neither closing the door to further rate cuts nor committing to them. The key marginal change occurred near the cutoff date: the June IPCA-15 released on June 25 showed a month-over-month increase of 0.41%, below market expectations of 0.44%, with a 12-month rate of 4.80%, and the monthly inflation momentum slowed significantly from 0.62% in May. The market immediately raised the pricing of an August rate cut, and a 25 basis point cut became the leading scenario again. Combined with the real interest rate still above 9%, weakening economic momentum, and the Focus survey's median Selic rate for end-2026 (14.00%) itself implying at least one more 25bp cut within the year, and August being the most natural and most suitable time before the October election noise, I judge that the probability of implementing a 25bp cut at the August 4-5 meeting is significantly higher than a pause. The probability of a 50bp cut is extremely low (Copom has clearly adopted a gradual pace of 25bp), and the probability of a rate hike is negligible, so NO mainly consists of 'holding steady'.

As of June 26, 2026, the Brazilian Central Bank's previous monetary policy meetings have consistently signaled gradual easing. Domestic inflation in Brazil has gradually fallen back to near the target range, economic growth momentum remains moderate, and mainstream market expectations generally anchor on a 25 basis point rate cut at the August meeting. Overall, the probability of a 25bps cut this time is assessed as high.

I judge that the probability of a 25 basis point rate cut at the August meeting is higher. The June 22 Focus survey clearly expected another 25 basis point cut in August and adjusted the end-2026 Selic forecast to 14.00%; in the Reuters survey of the same period, 19 of the 31 economists who answered the follow-up question expected another 25 basis point cut in August. [web:29][web:2] However, inflation expectations have been revised upward continuously, May inflation rose to 4.72% and exceeded the upper limit of the tolerance range, and the Copom meeting minutes emphasized the possibility of pausing before resuming rate cuts, so this is not a high-confidence judgment. [web:13][web:28]

As of June 26, 2026, most ex-ante forecasts and surveys point to the Brazilian Central Bank continuing to cut rates by 25 basis points at the August (August 4-5) Copom meeting. The Reuters survey from June 12-15 showed 19 of 31 analysts expected a 25bp cut in August; Valor's survey of over 100 analysts showed 70% expected an August cut; the Focus median also predicts another cut in August. Meanwhile, institutions such as BBVA still expect the central bank to continue easing at a 25bp pace. However, the minutes released on June 23 emphasized asymmetric upside inflation risks, leading Goldman Sachs to believe the central bank may pause in August and resume in the fourth quarter, increasing the probability of 'no cut'. Considering market expectations and the central bank's increasingly cautious communication, I believe the probability of a 25bp cut in August is slightly higher, but confidence is only moderate.

As of June 26, 2026, the Selic rate is 14.25%, and Copom has cut rates by 25bp in each of its last three meetings since March. The June decision was interpreted by the market as dovish and left the door open for further easing, and another 25bp cut at the August 4-5 meeting is the base case; however, the statement hinted that future 'pauses and cuts may alternate', and the market subsequently re-priced interest rates and inflation expectations upward, making an August pause a real risk. Overall, the probability of 'a 25bp cut in August' is about 60%, and other outcomes (pause or non-25bp change) are about 40%.

As of June 26, 2026, the Brazilian Central Bank (BCB) cut rates by 25 basis points for the third consecutive time to 14.25% at the June 17 COPOM meeting. The statement was more cautious, raising the 2026 inflation forecast to 5.2% and the relevant policy horizon inflation to 3.7%, emphasizing data dependence, providing no clear forward guidance, and noting upside risks to inflation and fiscal stimulus risks in an election year. The minutes released on June 23 further signaled a preference for a 'pause and cut alternating' path to avoid volatility, leading some analysts (such as Goldman Sachs) to shift to expecting a pause in August. However, the Focus survey on June 22 raised the median Selic forecast for end-2026 to 14.00% (previously 13.75%), clearly implying only one more 25bp cut from the current 14.25%, and the next meeting is in early August, with the market mainstream still pricing in that cut. The historical gradual rate cut pace (25bp each time), still highly restrictive real interest rates, and gradually slowing activity support continued fine-tuning. Considering the Focus consensus and divided views, I judge the probability of a 25bp cut in August is slightly higher.

As of June 26, 2026, the Brazilian central bank COPOM had cut rates by 25 basis points in each of three consecutive meetings (to 14.75% in March, 14.50% in April, and 14.25% in June), forming a stable gradual easing pace; the real interest rate remains at a global high, supporting continued small rate cuts. However, the Focus survey showed that the 2026 inflation expectation rose to 5.09%, the 12th consecutive upward revision, and the June meeting minutes clearly indicated high inflation risks and de-anchored expectations, increasing the risk of a pause in August. Overall, continuing the 25 basis point cut remains the baseline scenario, but with medium confidence.

Conclusion: I predict YES, but only slightly above 50-50. As of 04:00 UTC on June 26, 2026, Copom has cut rates by 25 basis points in each of its last three meetings, and the latest Focus survey puts the median Selic rate at the end of August at 14.00%, corresponding to another 25 basis point cut from 14.25%. The central bank believes that tight policy is causing the economy to slow down and chooses to avoid a sharp turn in the interest rate path; this makes continuing gradual rate cuts slightly advantageous. However, inflation has exceeded the upper limit of the target range, expectations continue to unanchor, and the minutes explicitly studied the combination of pausing and then resuming rate cuts, so the advantage is limited.

As of June 26, 2026, based on publicly available Brazilian inflation data, central bank guidance, and market consensus at that time, the market assessed the possibility of a 25 basis point rate cut by the Brazilian central bank at the August meeting as leaning toward likely but not certain. Inflation and output data supported a moderate rate cut path, but residual inflation risks and external uncertainties made a significant probability of this outcome not materializing.

Based on public information before June 26, 2026, and the Brazilian Central Bank's policy statements, the probability of the Brazilian Central Bank cutting rates by 25 basis points at the August monetary policy meeting is low. The following are key bases supporting this judgment: 1. **Inflation expectations continue to rise**: Brazil's June Monetary Policy Report shows that the 2026 inflation expectation was sharply raised from 4.1% to 5.3%, far above the central bank's 3% target, and has risen for several consecutive weeks. The 12-month inflation rate in June reached 4.72%, exceeding the upper limit of the target of 4.5%. Rising energy prices and strong domestic demand are the main factors pushing up inflation, making the central bank more cautious about rate cuts. 2. **Central bank policy stance turns hawkish**: The minutes and statement of the June 17 monetary policy meeting show that although the central bank cut rates by 25 basis points for the third consecutive time to 14.25%, its expression of inflation risks has clearly tightened. The central bank raised the 2026 inflation forecast to 5.2%, removed the commitment to further rate cuts, and emphasized that future policy adjustments will strictly depend on new economic data. This indicates that the central bank's tolerance for inflation has decreased and it may pause the rate cut cycle. 3. **Market expectation adjustment**: The Focus survey shows that the market's median forecast for the Selic rate at the end of 2026 has been raised from 13.25% to 13.5%, reflecting market concerns about persistently high inflation and narrowing room for rate cuts. Institutions such as Goldman Sachs also raised their end-2026 Selic rate forecast from 13.25% to 14% and postponed rate cut expectations. 4. **External risks and economic growth**: Although Brazil's economic growth forecast has been raised to 2.0%-2.3%, energy price increases caused by Middle East geopolitical conflicts and tightening global financial conditions have increased imported inflationary pressure. In addition, as a net oil exporter, Brazil benefits from rising oil prices, but inflationary pressure still limits the room for rate cuts. Based on the above analysis, the probability of the Brazilian Central Bank continuing to cut rates by 25 basis points at the August meeting is lower than the probability of keeping rates unchanged.

Based on public information available before June 26, 2026, it is impossible to determine with certainty whether the Central Bank of Brazil will cut interest rates by 25 basis points at its August monetary policy meeting.

Based on analysis of the Brazilian central bank's recent monetary policy stance and inflation environment, as of June 2026, the probability of the Brazilian central bank cutting rates by exactly 25 basis points at the August monetary policy meeting is low. Since pausing the rate cut cycle in mid-2024, Brazil has faced persistent inflation pressures and fiscal uncertainty, and the central bank may have shifted to raising rates or maintaining high rates to address inflation stickiness. Even if the central bank is in a rate cut cycle, it typically adjusts rates in 50 basis point increments, and 25 basis point cuts are only used near the end of the cycle. NO covers various scenarios including maintaining rates, raising rates, or cutting by a larger magnitude, and its probability is significantly higher than YES.

Based on information as of June 26, 2026, the Brazilian central bank maintained the benchmark interest rate at a high of 15% in the first half of 2026 to address inflation pressures above the target range. Despite expectations of rate cuts, the market generally predicted the Selic rate at the end of 2026 to be between 12.25% and 13.75%, and expectations in mid-June indicated that rates might remain high for longer. The August meeting was generally seen as an observation period, and as of June there was no clear signal of an immediate large rate cut; instead, there were actions to raise inflation expectations. Therefore, the probability of a direct 25 basis point rate cut at the August meeting was low, and it was more likely to remain unchanged or only release dovish signals rather than act immediately. In fact, subsequent information showed that the central bank did cut rates on August 5, but according to the question's cutoff time of 2026-06-26, the market expectations and official stance at that time tended to be cautious, and the surveys on June 15 and June 22 showed that interest rate expectations were even raised or remained at high levels, without forming a strong consensus for an immediate rate cut in August. However, it should be noted that the question requires a forecast based on the cutoff date. At the June 26 point, the market focus was on the persistence of high inflation and high interest rates. Although there was a rate cut path in the long term, the probability of a 25bp cut at the single August meeting did not appear dominant at that time, especially considering that inflation expectations were raised to 5.30% [9]. However, if referring to subsequent actual events (which cannot be used for prediction but can be used to verify logic), a rate cut did occur on August 5. But from the perspective of June 26, due to worsening inflation expectations [9][30], the central bank was more likely to hold steady or be very cautious. Considering the high inflation expectations and tightening stance at that time, predicting NO is more prudent, because the market was pricing in higher and longer interest rates.