FX.co ★ Brazilian Long-Term Yields Set to Rise After BCB Holds Rates

Brazil’s long-term yields were poised to rise after the BCB left the Selic rate unchanged at 13.75% at its November meeting, keeping it near a decade high. The decision reflected a challenging scenario of weaker growth, higher inflation and elevated uncertainty following President Lula’s reelection. Markets remain focused on fiscal policy, especially the government’s resolve to contain public spending and debt, which have expanded significantly in recent years. Expectations ahead of the meeting were split, with some investors anticipating a pause and others pricing in a sixth consecutive 25 bps cut. Policymakers pointed to worsening inflation expectations, rising uncertainty and a “more pronounced deceleration” in economic activity. The Copom statement underscored both the slowdown and the uncertainty surrounding its own projections. Labor market data also signaled cooling conditions, as Brazil generated 121,305 formal jobs in September, well below the market forecast of 171,000.