Overview

• The Q3 Monetary Policy Report lowered 2025 GDP growth to 2.0% and, for the first time, projected 1.5% for 2026, citing higher U.S. import tariffs and signs of domestic moderation partly offset by stronger agriculture and extractives.
• The BC now sees IPCA above the 3% target until at least early 2028, raised the chance of breaching the 2025 upper band to about 71%, and reiterated guidance to hold the Selic at 15% for a prolonged period.
• The output gap was revised upward, with officials highlighting a very tight labor market; services inflation remains a concern despite restrictive policy, according to the report and BC briefings.
• September’s IPCA‑15 rose 0.48% and came in below forecasts, with softer core services, but initial relief in rates was short‑lived as hawkish guidance and global risk aversion reasserted themselves.
• The Pre‑Copom survey showed 58% of analysts expect a net disinflationary impact from the trade conflict, though the BC stressed uncertainty over timing and magnitude, and markets continue to price only limited near‑term easing.