Secretariat for Economic Policy states that restrictive monetary policy will continue to slow down family activity and income
The government estimates that the cycle of falling Selic rates should only begin to produce clear effects in the 4th quarter of this year. The assessment was made by the SPE (Economic Policy Secretariat), of the Ministry of Finance, during the presentation of the Macrofiscal Bulletin this Monday (May 18, 2026). Here’s the (PDF – 824 kB).
According to the secretary of the SPE, Débora Freire, monetary policy will remain restrictive in the coming months because of the inflationary pressure caused by the rise in oil prices after the conflict between the United States and Iran. “Brazil is not in a position to reverse the cycle of monetary policy cuts”these.
According to Rafael Leão, undersecretary of Macroeconomic Policy at SPE, the lagged effects of the high Selic are still being transmitted to the economy. The SPE raised the terminal Selic rate estimate from 12% to 13% per year after the deterioration of the international scenario.
The undersecretary declared that monetary policy follows “as a vector to contain activity”. According to him, the slowdown should become more evident in the 2nd and 3rd quarters, before a recovery at the end of the year driven by the manufacturing industry.
The economic team also identified a loss of strength in family income. Real income grew 1.6% in the quarter, below the 3% previously recorded. The average yield slowed from 2.3% to 1.3%.
Despite this, the government considers that the job market remains resilient. The unemployment rate was 6.1% in the quarter ended in March, the lowest level in the historical series for the period.
Leão said that the oil shock raised global inflation and interrupted the cycle of falling interest rates in advanced economies. “The United States Federal Reserve has already abandoned the prospect of cutting interest rates in the short term, a scenario that reduces the space for monetary easing in Brazil.”
