Overview

• With the Federal Reserve cutting its rate by 0.25 point to 4%–4.25%, the Brazil–U.S. interest gap widened to about 10.75 points, shaping capital flows and currency dynamics.
• The Copom said policy will likely stay significantly contractionary for a "período bastante prolongado" and left open the option to adjust or resume tightening if warranted.
• Inflation remains above target despite August deflation of 0.11%, with 12‑month IPCA at 5.13% and Focus projections at 4.83% for 2025 and 4.30% for 2026.
• At 15%, Brazil holds the world’s second‑highest ex‑ante real interest rate near 9.5%, according to MoneYou and Lev Intelligence, trailing only Turkey.
• Industry groups and unions criticized the decision for restraining investment and jobs, while the labor market remains tight with unemployment at a record‑low 5.6% in the IBGE series.