Brazil just pulled off something markets didn’t see coming. Annual inflation dropped in June when economists were betting it would climb higher, and the central bank used the opening to cut rates for the third time in a row.
The country’s benchmark IPCA inflation gauge fell to 4.66% in June from 4.72% in May. That’s a meaningful miss from the 4.80% that market watchers had projected.
The rate cut trifecta
Brazil’s monetary policy committee, known as Copom, voted unanimously on June 17 to trim the Selic benchmark rate by 25 basis points to 14.25%. That marks the third consecutive cut of the same size since the easing cycle kicked off in March 2026.
Even with three cuts under its belt, Brazil’s interest rate remains at 14.25%. Inflation is still running well above where the central bank wants it. The official target sits at 3%, with a tolerance band of plus or minus 1.5 percentage points. At 4.66%, the June reading is above that 4.5% upper ceiling.
