In a first reading, many analysts saw space opening up for Selic cuts to begin as early as January
The market anxiously awaited the new indicators from the United States and the Copom minutes to redefine the perspectives regarding interest rate policy in both countries. And there was a certain disappointment. The Copom minutes even came with a more dovish tone than the statement from last week’s meeting, which was almost a photocopy of previous meetings, with the same concerns.
The Committee made changes to the cyclical diagnosis of inflation and activity, recognizing the deceleration movement, in both cases and, even, of inflation in services, with a less adverse external environment.
The Committee also began to separate cyclical and structural factors when evaluating labor market data. Despite unemployment at historically low levels, it admits signs of moderation, such as the reduction in the employed population. It is an important change of stance, indicating that it recognizes the beginning of the cyclical cooling of the labor market, relevant to the slowdown in demand and price adjustments. In a first reading, many analysts saw space opening up for Selic cuts to begin as early as January. A modest cut of 0.25 points, but a first step.
The problem is that The Copom highlighted the weight of high interest rates in this process – monetary policy at a significantly contractionary level, which has been producing the expected effects on prices and activity. But inflation and projections still remain above the center of the target, 3%. Therefore, the space is open to discuss the beginning of the interest rate cut, but the policy adopted so far has been appropriate. New communication changes must occur. Activity and inflation data will continue to be evaluated. But the biggest bet is still to cut basic interest rates only at the March meeting, even with very divided opinions.
As for the United States, unemployment rose to 4.6%, above the expected 4.4%, to the highest level since 2021. But this worsening had a lot to do with the cut of 105 thousand jobs in October, the beginning of the shutdown, which paralyzed government activities and the publication of indicators. But in November, 64 thousand jobs were created, above the 50 thousand predicted by market consensus.
Given this improvement and with inflation running at a higher level, the Federal Reserve is comfortable maintaining interest rates in January, after the cuts at the last meetings, with rates between 3.5 and 3.75%, no longer at a contractionary level. The FED has time to better evaluate the indicators, the evolution at the beginning of 2026. And there is a market supporter for interest rate cuts in the United States, to stimulate a greater flow of investments to other markets.
Ultimately, January, depending, of course, on the evolution of the various indicators, could start without any news regarding interest rates. Both in Brazil and in the United States.
*This text does not necessarily reflect the opinion of Jovem Pan.
