Brazil's central bank unanimously decided to cut its policy interest rate by 0.25 percentage points to 14.00%, the lowest level since March 2025 and the fourth consecutive rate cut, in line with market expectations. It left the door open for further reductions at its September meeting, stating that the decision will depend on economic data received before the next meeting. The Monetary Policy Committee remains concerned about the persistent long-term inflation outlook breaching the target range, and reiterated that it is monitoring closely as this could make disinflation more economically costly. The central bank kept its 18-month policy horizon inflation forecast unchanged at 3.2%, while lowering its 2026 inflation forecast to 5.1% and raising its 2027 forecast to 3.8%.
Rate cut and expected further cuts reduce long-term yields.
Central bank cuts rate by 0.25% to 14%, signaling further cuts, which lowers yields.
