StanChart Sees Slower Easing Path for Brazil Rates Soon

Written by Sandra Leggero

Sandra Leggero has a background in financial markets, having spent more than 9 years in commodities trading for several European and Asian companies. She holds a degree in Economics from the University of Pavia and specializes in emerging markets.

, | Updated: June 24, 2026

Key Moments

Standard Chartered’s Dan Pan expects Banco Central do Brasil (BCB) to slow its easing cycle as inflation dynamics remain difficult.
The Selic rate is now projected to pause in Q3 before rate cuts resume in Q4-2026, with policy rates seen at 13.75% by end-2026 and 11.75% by end-2027.
BCB reduced rates by 25bps on 17 June and year-end policy rate forecasts for 2026 and 2027 have been revised higher from prior projections.

Revised Outlook for Brazil’s Policy Path

Standard Chartered analyst Dan Pan anticipates a more measured pace of monetary easing by Banco Central do Brasil (BCB) as inflation remains a concern. According to the revised projections, the Selic rate is expected to hold steady in Q3, with fresh cuts not resuming until Q4-2026.

Under the updated forecast, policy rates are seen at 13.75% by the end of 2026 and 11.75% by the end of 2027, levels that are higher than previously estimated.

Rationale Behind a More Cautious Easing Cycle

Pan highlights a series of inflation-related challenges that are limiting the scope for near-term policy loosening. As stated:

“We now expect a more gradual easing cycle from Banco Central do Brasil (BCB) given the increasingly challenging inflation scenario.”

The analyst points to several key factors:

“Rising inflation expectations, stubborn core inflation and surprisingly resilient domestic demand suggest that room for near-term rate cuts has diminished.”
“Falling energy costs, slowing demand, and easing election-related market volatility after the October 2026 elections should reopen the door for rate cuts in Q4-2026 and 2027.”