Economists lifted inflation and Selic projections after the vote; Finance Minister says no plan to cut rates sharply.
MoneyTurkey Economics Desk | 4 November 2026
Key points
- Reuters poll showed analysts now expect the central bank to pause its easing cycle after five straight 25-basis-point cuts that took the Selic rate to 13.75%.
- Finance Minister Dario Durigan said the government is not considering a proposal to lower the benchmark rate to 7.5% and has not concluded talks on fiscal measures that could raise public spending.
Brazilian economists raised their inflation and interest-rate forecasts after President Luiz Inacio Lula da Silva’s reelection, according to Reuters and Bloomberg reports. The shift reflects concern that fiscal policy may loosen and that the central bank may slow its easing cycle. Finance Minister Dario Durigan said the government is not weighing a proposal to slash the Selic rate to 7.5%.
What happened
Reuters reported that a local media story about a possible meeting between Lula and economist Andre Lara Resende triggered market discussion. Lara Resende had argued in September that Brazil’s high debt-service bill is the main driver of fiscal deterioration and proposed gradually lowering the Selic rate to around 7.5%.
Durigan told reporters on Tuesday that the idea is not on the table and that no meeting is scheduled. He described the proposal as an early-stage idea for public debate that has several shortcomings.
Bloomberg noted that private-sector economists opposed the plan, saying it could weaken the currency. The central bank is due to announce its next policy decision on Wednesday.
What the numbers say
The Selic rate stands at 13.75% after five consecutive 25-basis-point cuts. A Reuters poll showed analysts expect the central bank to pause its easing cycle at the upcoming meeting.
Durigan said the government has not concluded discussions on gradual fiscal-adjustment measures consistent with Lula’s campaign promises, which could push up public spending. He added that the administration is not discussing anything that would justify a fearful market reaction.
Why it matters
Higher rate forecasts signal that markets now see less room for further monetary easing if fiscal policy loosens. The debate over Lara Resende’s proposal has raised questions about whether the government might seek to reduce debt costs through lower borrowing rates rather than spending restraint.
Durigan’s comments aim to reassure investors that the administration remains focused on fiscal credibility. The central bank’s Wednesday decision will show whether policymakers share the market’s caution or continue cutting despite the political backdrop.
What to watch
- Central bank policy statement and any change to forward guidance
- Next inflation data and revisions to private-sector forecasts
- Fiscal package details and market reaction to spending measures
- Real exchange rate moves after Durigan’s remarks
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For information only. Not investment advice.
Sources
- Reuters: https://www.reuters.com/world/americas/brazil-economists-raise-inflation-rate-forecasts-after-lula-reelection-2026-11-03/
- Reuters: https://www.reuters.com/world/middle-east/uae-non-oil-firms-raise-prices-record-pace-october-pmi-shows-2026-11-04/
- Bloomberg: https://www.bloomberg.com/news/articles/2026-11-03/brazilian-key-rate-forecasts-soar-after-lula-s-shock-reelection
- Yahoo Finance: https://finance.yahoo.com/economy/policy/articles/brazils-lula-not-weighing-proposal-155457175.html
