The latest round of economic activity and inflation data has strengthened market confidence that the monetary easing cycle will continue, with expectations for another quarter-point cut—bringing the Selic, Brazil’s benchmark interest rate, to 14%—virtually unanimous among the 113 banks, asset managers and consultancies surveyed by Valor.

In addition to collecting forecasts, Valor interviewed economists from institutions that ranked among the Top 5 in the Central Bank’s most recent Focus survey for short-term Selic projections, covering the second quarter. While the prevailing view is that recent data and the Monetary Policy Committee’s (Copom) communication point to another cut at next Wednesday’s meeting, there’s less conviction about how long the easing cycle will last, given risks stemming from both the domestic and external outlook.

Of the 113 institutions that shared their expectations, only three don’t expect a 25-basis-point cut this week: Citi, Pantheon Macroeconomics, and Suno Research. Beyond August, 46 expect the easing cycle to end either at next month’s meeting or immediately after this week’s, while 64 expect at least one additional cut between September and December.

Barclays chief economist for Brazil Roberto Secemski has for some time expected a 25-basis-point reduction this week and believes developments in economic variables since the June meeting have reinforced that call. In his view, the Central Bank already signaled a preference for continuing the easing cycle in June by extending the relevant policy horizon earlier than the current institutional framework would suggest (18 months), citing the estimated effects of El Niño on prices. The latest sequence of inflation and activity data, he adds, also supports continued calibration of the degree of monetary restraint.

“Indeed, since the last meeting, most data have come in weaker than expected, although not to the extent that the risks to inflation converging to target have disappeared. We’re still operating in an environment that calls for caution,” Secemski says. He notes that the recent improvement in headline inflation owes largely to a reversal in at-home food prices, and that the easing in core inflation has been driven mainly by specific items, while labor-intensive services inflation reached a nine-year high, rising 7.3% year over year.

On Copom’s communication, the Barclays economist doesn’t expect the Central Bank to close the door to further cuts, nor to openly endorse another 25-basis-point move. “I believe the message will be ‘agnostic’ regarding future decisions, meaning Copom will stay data-dependent. My expectation, however, is that the balance of risks will continue to be tilted to the upside, though it’s not clear to me whether that will appear in the statement or only in the minutes, as happened at the previous meeting.”

BV chief economist Roberto Padovani also expects a statement that offers no guidance on the Central Bank’s next moves, leaving the door open to either further easing or a pause beginning in September.

“Given the high degree of uncertainty, the Copom will continue to avoid committing to its next steps. That’s been the approach adopted by central banks in general,” he says.

Padovani also expects another cut to 14%, pointing not only to the Central Bank’s “preference” for continuing to lower rates but also to recent data supporting that scenario—particularly July’s IPCA-15 inflation reading, which he views as an important sign that inflation continues to converge toward target, albeit slowly. Weaker economic growth is also expected in the near term.

“With weaker activity and inflation converging, this calibration makes sense from the Central Bank’s perspective. Monetary policy will remain tight, but to a lesser degree.”

Daycoval chief economist Rafael Cardoso also expects the Copom to cut the Selic by 25 basis points on Wednesday and to refrain from providing guidance for the next meeting, keeping alive the possibility of another cut in September.

“When we update our model assumptions, inflation projections for the new relevant horizon—the first quarter of 2028—should change very little from previous estimates and remain around 3.2%. If that proves correct, and the model incorporates the rate path embedded in the Focus survey, there may be room for another 25-basis-point cut. That’s not our base case, and conditions would have to evolve favorably for it to happen, but the probability isn’t zero,” he says.

Daycoval’s baseline scenario has the Central Bank pausing once the Selic reaches 14%.

“In our assessment, the probability of another cut in September is still a minority scenario. If the decision brings any surprises—a lower inflation forecast, say, or comments suggesting a September cut has become the likelier outcome—we may revise our view. But for now, we see this as the pause cut,” he says.

Having ranked among the Top 5 in several Focus survey categories in recent months, Linus Galena economist Ricardo Meirelles de Faria holds a more optimistic view, arguing that the current level of rates is excessively restrictive despite highly expansionary fiscal policy.

“I personally expect 25-basis-point cuts at each of the next four meetings, even with the back-and-forth developments in the war with Iran,” he says.

The economist notes that much of the market was disappointed by Copom’s June meeting, despite a cut having been widely priced in. In his view, part of that frustration stemmed from the Central Bank’s “clumsy” communication.

“I believe the communication will now be similar in substance, but I expect the Central Bank to be more careful when discussing inflation’s convergence toward target over the relevant horizon,” Meirelles says, adding that Copom may leave the door open to another cut at its September meeting.

“When we look at activity data and the IPCA, there’s room to bring the Selic down a bit further. Real interest rates are still very high, and in that sense, I know I’m somewhat outside the consensus,” he says, projecting the benchmark rate at 13.25% by year-end. “Obviously, a lot can happen, and we’ll have to monitor the elections, but the feeling is that some of that is already reflected in market prices.”

Parcitas Investimentos chief economist Vitor Martello also expects a 25-basis-point cut at Wednesday’s meeting and believes the odds of another cut of the same size in September are rising.

“Will it signal anything about September? We don’t think so. This Central Bank doesn’t usually make decisions in advance, especially in an environment of elevated uncertainty. The strategy should continue to be monitoring data on aggregate demand, economic activity and inflation—particularly core inflation—and making the decision considered most appropriate at each meeting. In our view, that decision would be to cut another 25 basis points next week and then stop at 14%,” he says.

“Our assessment is that the Central Bank is gaining, not losing, confidence in its baseline scenario—one of inflation remaining under pressure but gradually converging toward target, with high rates being transmitted through the economy, which the data are confirming,” he says.

Looking beyond August, BV’s Padovani believes the ideal approach is to pause the easing cycle amid a macroeconomic environment filled with uncertainty. “I think a pause makes sense now, and as the dynamics of inflation become clearer, the process of cutting rates could resume at some point in 2027,” he argues.

Among the factors that still need greater clarity, the economist cites the dollar’s behavior through year-end, the likely effects of El Niño on food inflation, and market perceptions of fiscal policy following the presidential election.