Brazil Rates and the BCB: Selic, DI Curve, Fiscal — 2026-09-13
Markets are pricing in a 95% probability of a 0.25% Selic cut to 13.75% at the upcoming Copom meeting, driven by cooling inflation data. Meanwhile, fiscal uncertainty looms large, with major banks warning that rates could spike to 20% if the next administration fails to implement rigorous budget adjustments. The DI futures curve has seen mixed movement, reacting to both global oil prices and domestic election polling.
Brazil Rates and the BCB: Selic, DI Curve, Fiscal — 2026-09-13
Top developments
Copom Meeting Odds Climb to 95% for Rate Cut
B3 options data indicates a 95% chance that the Central Bank of Brazil (BCB) will cut the Selic rate by 0.25 percentage points to 13.75% at the September 15-16 meeting. This decision coincides with the US Federal Reserve’s own policy decision, creating a synchronized global monetary policy moment for investors. The high probability reflects market confidence in the BCB’s ability to manage inflation expectations while supporting growth.
Banks Warn of 20% Rates Without Post-Election Fiscal Adjustment
Major investment banks are issuing stark warnings that Brazil’s interest rates could rise to 20% annually in a worst-case scenario if the next president fails to present a rigorous budget plan immediately after the election. Analysts argue that current fiscal frameworks lack credibility, and without immediate spending cuts or revenue measures, the risk premium on Brazilian debt will surge. This outlook has intensified scrutiny on candidate platforms regarding fiscal discipline.
DI Futures Curve Volatile Amid Oil and Election Polls
The DI futures curve experienced significant volatility this week, with rates initially rising due to higher global oil prices and later falling as election polls showed a technical tie, reducing perceived political risk. Specifically, the DI contract for January 2027 saw fluctuations as traders adjusted positions based on both external commodity shocks and internal political stability indicators.
Senate and Chamber Consultancies Release 2027 Budget Analysis
The consultancies for the Brazilian Senate and Chamber of Deputies have released their technical analysis of the 2027 Budget Proposal (PLOA), which projects a primary surplus of R$ 18.6 billion and GDP growth of 2.46%. The report highlights the government’s assumption of a minimum wage increase to R$ 1,741, but notes challenges in meeting these targets given current expenditure trends.
Local view
Local financial media, including Money Times and Valor Econômico, are closely tracking the "election trade" on trading desks, where positioning is increasingly tied to polls favoring opposition candidates who promise stricter fiscal rules. Money Times reported that the DI curve fell across all maturities as the prospect of a contested election reduced the likelihood of extreme policy shifts from the current administration, though this was tempered by global risk aversion.
Context & numbers
- Selic Rate: Currently at 14.00%; market consensus for next cut to 13.75%.
- DI Jan 2027: Traded around 13.635% after recent declines, reflecting optimism about rate cuts.
- Public Debt: Reached 82.5% of GDP in July, the highest level in over five years.
- 2027 Budget: Projects R$ 18.6 billion primary surplus; total federal revenue expected at R$ 3.459 trillion.
On the radar
- Copom Decision: September 15-16, 2026 — Watch for confirmation of the 0.25% cut and any changes in forward guidance regarding the pace of future easing.
- IPCA Inflation Print: Upcoming release of the monthly IPCA index will be critical to validate the cooling inflation trend that supports rate cuts.
- TCU Fiscal Projections: The Federal Court of Accounts (TCU) recently demanded that public debt projections use the lower bound of the fiscal target rather than the center, potentially tightening the fiscal space available for spending.
This content was collected, curated, and summarized entirely by AI — including how and what to gather. It may contain inaccuracies. Crew does not guarantee the accuracy of any information presented here. Always verify facts on your own before acting on them. Crew assumes no legal liability for any consequences arising from reliance on this content.
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