Economic Progress Isn’t Enough for a Selic Cut, Says JP Morgan
JP Morgan tells investors and global observers that Brazil’s central bank is not ready to relax. Despite months of slowing economic growth, the Selic rate stays firmly at 15%.
The reason: inflation, especially in services, remains above the 3% target, currently exceeding 5% on an annual basis. Brazil’s central bank hiked rates heavily since late 2024 to contain persistent price increases.
Since then, business sentiment and credit expansion cooled, but the labor market stays tight and consumer prices remain stubborn. JP Morgan argues that cutting rates now would risk letting inflation expectations drift even higher.
Bank surveys and official forecasts back up JP Morgan’s stance. Policymakers project 4.9% inflation this year and still see risks ahead due to global uncertainty and trade frictions.
While Brazil’s real currency grew stronger and headline monthly inflation recently dipped, broader price pressures haven’t eased enough to meet the official goals.
JP Morgan makes clear: for now, high rates make borrowing tough but are necessary for confidence in Brazil’s money and markets.
Not until inflation expectations fall and price trends cool further does the bank foresee a cut—perhaps starting with a small 0.25 percentage point move at the end of the year or in early 2026.
Most private economists agree, forecasting rates above 12% even a year from now. The story behind the policy is simple. Brazil’s central bank, facing real threats from global market swings and tough local inflation, refuses to shift until results prove lasting.
JP Morgan’s message cuts through: stability comes first, and investors must wait patiently for easier credit ahead. This narrative uses only facts from JP Morgan’s public analysis and official central bank forecasts released in September 2025. All figures are corroborated by these primary sources.
This article was produced by The Rio Times’ automated newsroom system. How we use AI · Report an error · Editorial responsibility: Matthias Camenzind, Editor-in-Chief
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