Standard Chartered’s Dan Pan anticipates that Banco Central do Brasil (BCB) will adopt a more gradual monetary easing cycle due to persistent inflationary pressures and resilient domestic demand [1]. According to Pan, the central bank is expected to pause its rate-cutting cycle in the third quarter, with the next phase of rate reductions likely to resume in the fourth quarter of 2026 and continue into 2027 [1]. The forecast now sees the Selic policy rate at 13.75% by the end of 2026 and 11.75% by the end of 2027, both higher than previous projections of 12.5% and 10.0%, respectively [1].
The shift in outlook is attributed to rising inflation expectations, stubborn core inflation, and unexpectedly robust domestic demand, all of which have reduced the scope for near-term rate cuts [1]. However, Pan notes that factors such as falling energy costs, slowing demand, and a reduction in election-related market volatility after the October 2026 elections could create conditions for renewed rate cuts in late 2026 and 2027 [1].
The BCB most recently cut rates by 25 basis points on June 17, signaling a cautious approach in the current environment [1]. No immediate market reaction or analyst opinions beyond Standard Chartered’s forecast are mentioned in the article [1].
CONCLUSION
Standard Chartered’s revised outlook signals a more cautious and gradual easing path for Brazil’s central bank, with higher policy rates expected through 2027 due to persistent inflation and resilient demand. The next phase of rate cuts is anticipated only after the 2026 elections, reflecting ongoing economic challenges. Market participants may need to adjust expectations for the pace and timing of monetary easing in Brazil.