Rate Reduction This is the central theme of this article, which addresses the recent decision by the Monetary Policy Committee (Copom) to reduce the Selic rate from 14,50% to 14,25% per year.

This change, which marks the third consecutive interest rate reduction, was influenced by several factors, such as the fall in oil prices and the resilience of the labor market.

However, the external scenario remains uncertain, especially due to tensions in the Middle East.

In this article, we will explore the implications of this decision for the Brazilian economy and the expectations for the near future.

Copom decision on June 17, 2026

On June 17, 2026, the Copom (Monetary Policy Committee) reduced the Selic rate from 14,50% to 14,25% per year.

The decision confirmed market expectations and marked the third consecutive reduction of the basic interest rates.

The move came after a drop in oil prices, which helped ease inflationary pressures.

Nevertheless, the external scenario remains uncertain, with tensions in the Middle East.

At the same time, economic activity is showing acceleration and the labor market remains resilient.

Controlling inflation remains central to the monetary strategy., in line with the target of 3% and a range of 1,5% to 4,5%.

According to the most recent projections, the IPCA (Brazilian consumer price index) for next year is at 4,10%, above the central target, which calls for caution.

The Central Bank should continue to assess inflation expectations and upcoming data before making further adjustments to monetary policy.

Falling oil prices and an uncertain external environment.

The fall in international oil prices helped alleviate inflation in Brazil because it reduced the costs of fuel, freight, and industrial inputs, as well as decreasing pressure on derivatives such as gasoline and diesel, which influence transportation and various prices in the economy.

At the same time, although The external environment remains unstable due to conflicts in the Middle East.However, this shock did not negate the positive effect of the cheaper commodity in the short term.

Thus, the Copom (Monetary Policy Committee) gained some room to reduce the Selic rate by 0,25 percentage points, to 14,25% per year, without losing its caution.

Nevertheless, the projected IPCA inflation rate of 4,10% for next year remains above the central target of 3%, which keeps the Central Bank attentive to expectations and the risks of a further rise in oil prices.

Month	Price of a barrel	% Change
April	US$ 82	-3%
May	US$ 76	-7%
June	US$ 72	-5%

Internal dynamism and a resilient labor market

The domestic economy showed Visible strengthening in 2026, with accelerated activity, increased income, and improved formal employment.

The labor market remained resilient, supported by demand for workers in various sectors, which helped preserve household consumption and business confidence.

Furthermore, the fall in oil prices eased inflationary pressures and opened up room for greater predictability in monetary policy.

The Copom (Monetary Policy Committee) observed that this internal dynamism indicates the capacity to absorb gradual cuts in the Selic rate, currently at 14,25% per year.

Nevertheless, inflation expectations remain above the central target of 3%, with a projection of 4,10% for next year, which keeps monetary policy vigilant in the face of external risks and the persistence of an uncertain global environment.

• Employment and income on the rise.
• Stronger economic activity
• Resilient labor market

Inflation expectations and the future trajectory of the Selic rate.

The Copom (Monetary Policy Committee) remains attentive to inflation expectations, as they influence contracts, prices, and consumption and investment decisions.

A official inflation target remains between 1,5% and 4,5%with its center in 3%This requires discipline in conducting monetary policy.

In this scenario, the IPCA projection for next year was revised to 4,10 %, above the center of the target and close to the upper limit.

This reinforces the need for monitor expectationssince persistent pressures could alter the future trajectory of the Selic rate.

Furthermore, signs of accelerating economic activity and a resilient labor market are keeping the monetary authority vigilant.

Thus, if inflation does not converge to the target, the Central Bank may adjust interest rates to preserve the credibility of the inflation targeting regime and contain new inflationary risks.

Rate Reduction This is a crucial response from the Copom (Monetary Policy Committee) to current economic dynamics.

Monitoring inflation expectations and the external environment will remain essential for achieving the established economic goals.