Overview

• The latest Copom minutes reaffirm a significantly contractionary stance for a “bastante prolongado” period and keep the door open to further hikes, citing unanchored expectations and external risks including potential U.S. tariffs on Brazil.
• The government lifted the 2025 budget block to R$12.1 billion and raised the central-government primary deficit forecast to R$30.2 billion, driven largely by higher mandatory spending such as BPC.
• Dario Durigan said high interest rates are slowing activity and trimming projected tax revenue by R$2.4 billion, while confirming no change to planned spending and an upward revision of expected state-firm dividends by R$6.9 billion to R$48.8 billion.
• MP 1.303/2025, which standardizes taxation on currently exempt instruments like LCI, LCA, CRI, CRA and incentivized debentures with a 5% IR and includes spending-review measures, must be voted by October and is treated as a priority.
• Market pricing tightened with DI futures higher as political and fiscal uncertainty increased; separately, Finance Minister Fernando Haddad argued the Selic “shouldn’t be at 15%” and sees room for cuts even as the BC signaled caution.