Published Monday, 2 November, 5:45 p.m. ET · Source: public posts by Brazilian lawmakers, Finance Ministry statements, Banco Central do Brasil
Key Facts
—The pressure. Lula-allied lawmakers pressed for lower rates and attacked the market on Monday, 2 November, before the Copom decision.
—The rate. The central bank’s benchmark Selic stands at 13.75% a year; Copom, the central bank’s rate committee, decides on Wednesday, 4 November.
—The reply. Finance Minister Dario Durigan said a rate cap and a reserve sell-off are not being considered.
—Prediction markets. Polymarket, a prediction market, puts “no change” at 84.5% and a quarter-point cut at 13.0% (2 November, 5:21 p.m. ET).
Brazil’s election is over, but the argument about money has just begun. Within days of President Luiz Inácio Lula da Silva’s runoff win, his allies are leaning on the central bank to cut rates, while investors are betting it will not.
The Copom, the central bank’s rate-setting committee, meets on 3 and 4 November, and its decision on the Selic, the policy rate that sets borrowing costs across Brazil’s economy, lands on Wednesday evening. The Selic is 13.75%, the level it reached on 16 September.
Three Lawmakers Go Public
Federal deputy Lindbergh Farias, a Rio de Janeiro member of Lula’s Workers’ Party (PT), posted on X (formerly Twitter) on Monday that the market is “doing politics and sabotaging our economy.” He wrote that the Selic should not be set by the “mood of the financial market” and pressed central bank president Gabriel Galípolo on rates.
Gleisi Hoffmann, a federal deputy and former PT president, wrote that “this financial market has authoritarianism in its DNA.” Zeca Dirceu, a PT deputy from Paraná, said rates must fall, but not “by force,” and that economic policy cannot be “hostage to the interests of those who earn a lot from high rates.”
Why the Tone Hardened
Before the runoff, forecasters expected the central bank to keep trimming the Selic. After Lula’s win, part of the market began to doubt that, worried about how the new government will handle the budget.
The stock market took the blow first: Brazil’s main index, the Ibovespa, lost about 18% in the week to Friday, its worst week since March 2020, and the real weakened to about 5.44 per dollar.
The Selic peaked at 15% and has come down in quarter-point steps since March, to 13.75%. Fewer expected cuts mean higher borrowing costs for longer, and that is what Lula’s allies are protesting.
A Famous Economist Enters the Debate
André Lara Resende, one of the architects of the 1994 Real Plan that ended Brazil’s hyperinflation, has proposed bringing the Selic down to about 7.5% over 12 months. He also wants a new fiscal and monetary council to set targets over four to five years.
Finance Minister Dario Durigan responded on Monday that proposals to cap interest rates or burn foreign-exchange reserves are not under evaluation. He also said no meeting between Lula and Lara Resende is scheduled.
What Prediction Markets Say
On Polymarket, a crypto-based prediction market, traders put the chance that Copom leaves the Selic unchanged on Wednesday at 84.5%, against 13.0% for a 25-basis-point cut, with US$132,741 traded (2 November, 5:21 p.m. ET). For December, “no change” is at 68.0% and a quarter-point cut at 25.0%.
Why we show this: prediction markets turn real-money bets into a live probability that moves within minutes of the news, which is why investors, campaigns and newsrooms in the United States now follow them closely. We show them next to polls and official results, never instead of them.
What It Means for US Readers
The real closed Friday at about 5.44 per dollar, and the B3 stock exchange was shut on Monday for a holiday. The Ibovespa last closed at 167,921.80 on Friday, 30 October, down 0.75%.
Dollar investors in Brazilian stocks and in the iShares MSCI Brazil ETF (EWZ) see the first market reaction when B3 reopens on Tuesday, a day before the decision. A hold keeps borrowing costs high for Brazilian companies, while a surprise cut would put fresh pressure on the real.
What Is Not Known
No one knows yet how Galípolo or the committee will answer the political pressure. The central bank is formally autonomous, and its statement after Wednesday’s decision will show whether it signals more cuts or a pause. A hold at 13.75% would confirm the market’s doubts; a cut to 13.50% would side with the allies.
Sources
Banco Central do Brasil, Copom · Ministry of Finance of Brazil · Polymarket, Bank of Brazil decision in November · public posts on X by Lindbergh Farias, Gleisi Hoffmann and Zeca Dirceu
This article was drafted with automated assistance and reviewed before publication. How we use AI · Report an error · Editorial responsibility: Matthias Camenzind, Editor-in-Chief
Brazil runoff, Sunday, October 25: When is the Brazil runoff election. Latest: Brazil runoff polls, Flávio 51%, Lula 49%.
Frequently Asked Questions
When does the Copom decide on the Selic?
The committee meets on 3 and 4 November 2026, and the decision is due on Wednesday, 4 November, after the market close.
What is the Selic rate today?
The Selic is 13.75% a year, down from a peak of 15%. It has fallen by quarter-point steps since March.