A Selic cut does not remove Brazil’s risk premium

On 16 September, Copom cut the Selic by 0.25 percentage point to 13.75% a year, Agência Brasil reported.

Source-based facts

The decision was unanimous. The report cites uncertainty surrounding Middle East conflicts and advanced-economy monetary policy. This is a dated decision, not a live rate quote.

Observer analysis

Our cautious conclusion: a cut in the policy rate is not an endorsement of Brazilian assets. External shocks and domestic credibility can still move the currency and longer-term yields. Investors relying on continuing cuts risk disappointment if inflation pressure returns. The transmission to an individual portfolio depends on maturity, currency exposure and instrument.

What could reduce the risk

Easing can reduce borrowing costs and support activity. Continued disinflation and stronger policy credibility would weaken these risks.

Original source

Agência Brasil · Wellton Máximo · contribution: Luciano Nascimento
BC reduz juros básicos para 13,75% ao ano ↗
Published: 16 September 2026 · Decision: 16 September