Brazil Market Brief — Monday, September 29, 2025

Brazil’s data pulse today centered on inflation and credit. The September IGP-M came in a touch hotter than expected, while August bank lending showed steady momentum. The BCB’s weekly Focus survey was released but figures were not provided here.

Inflation: IGP-M (Sep)

IGP-M rose 0.42% m/m (consensus 0.35%; prior 0.36%). The upside surprise is modest but noteworthy given IGP-M’s sensitivity to tradables and wholesale inputs.

It hints at lingering pipeline pressures from commodities and regulated items, even as core consumer disinflation has progressed this year. For rent contracts indexed to IGP-M, the pickup marginally increases adjustment pressures into Q4.

Credit: Bank lending (Aug)

Total bank lending expanded 0.5% m/m in August (prior 0.4%). The sequential improvement suggests demand for working-capital and household credit remains resilient despite tight real rates.

If sustained, firmer credit creation can support domestic activity into year-end, but it also argues for caution if it feeds demand-side price pressures.

Policy and expectations

With IGP-M surprising on the upside and credit firming, the immediate read-through for the Selic path is slightly hawkish on the margin.

The Focus survey, released today (details not included here), will be important for gauging whether inflation expectations drifted following recent fuel and administered-price adjustments. If expectations tick higher, it could limit room for additional policy easing or extend a hold.

Market implications

Rates: Front-end DI contracts may reprice higher on the IGP-M beat and steady credit growth, flattening the curve if terminal-rate expectations edge up.

FX: BRL sensitivity to terms-of-trade remains a swing factor; today’s inflation print leans against aggressive easing expectations, which can be BRL-supportive if external risk is calm.

Equities: Interest-sensitive sectors could lag on hawkish repricing, while exporters and commodity names may fare better if wholesale-price strength reflects firm external demand.

What to watch next

1. Full breakdown of the IGP-M basket to see whether wholesale or administered components drove the beat.
2. The latest Focus survey medians for IPCA 2025–2027 and Selic end-2025 to confirm if expectations are anchoring.
3. September high-frequency price readings (diesel/gas, food) and public-tariff adjustments that could carry into IPCA.

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