Brazil Activity Gauge Points to Q3 Contraction as 2025 Inflation Outlook Slips Below Target Ceiling

Overview

• Brazil’s IBC‑Br fell 0.9% in the third quarter and 0.2% in September versus August, signaling a loss of momentum across industry, services, taxes and agriculture proxies.
• The Boletim Focus cut the 2025 IPCA median to 4.46%, the first reading this year below the 4.5% tolerance limit, while projections for later years were unchanged.
• Despite the softer data, the Selic is held at 15% and the Focus survey still shows 15% at end‑2025, with the Banco Central reiterating caution given inflation above the 3% target center.
• Local assets repriced: DI futures rose across key maturities, the dollar advanced to about R$5.33, and the Ibovespa slipped below 157,000 points.
• Global factors added to volatility as U.S. data and Fed communications resumed after the shutdown and Japan reported a preliminary Q3 GDP contraction of 0.4% quarter‑over‑quarter.