World Bank Trims Brazil Outlook as Markets Price Mid-2026 Fed Cuts and U.S. Tariffs Lift Oil

Overview

• The World Bank cut Brazil’s growth forecasts to 2.3% in 2025 and 2.0% in 2026, warning that rising public debt and constrained investment pose fiscal risks.
• U.S. CPI rose 0.3% in December and 2.7% year over year, with core up 0.2%; alongside a slightly softer PPI, swaps now fully price a first Federal Reserve rate cut by June 2026.
• President Trump announced an immediate 25% tariff on countries that do business with Iran, lifting Brent to the highest since November and boosting Petrobras shares, while U.S. tariff receipts surged and the Q4 2025 deficit narrowed 15%.
• China reported a record 2025 trade surplus of US$1.189 trillion, supported by export diversification away from the U.S. and stronger shipments to regions such as ASEAN and Africa.
• Short-dated Brazilian rates fell after cooler U.S. prints and softer local services data, reinforcing talk of a Selic-cut start in March, as the Federal Police launched a new phase of Operation Compliance Zero targeting Banco Master and named businessmen.