Brazil’s central bank unanimously held the Selic at 13.75% on Wednesday, ending a 125-basis-point easing run as the real stayed weak near 5.46 per dollar after Luiz Inácio Lula da Silva’s October 25 reelection. Copom raised its inflation path, removed the prior nod to future cuts, and said price risks are tilted to the upside.
MoneyTurkey Currencies Desk | 5 November 2026, 06:25 London. USD/BRL about 5.46 as of the London morning tape
Key points
- Copom held Selic at 13.75% unanimously; 33 of 48 Reuters-polled economists had expected the pause after five 25 bp cuts since March
- Statement lifted the horizon inflation projection to 3.5% (from 3.1% in September), raised 2026/2027 paths, and dropped the reference to likely further cuts
- USD/BRL trades near 5.46 after jumping from about 4.97 on election day to above 5.40 in the days after Lula’s runoff win over Senator Flávio Bolsonaro
For FX desks the story is not only the hold — it is that Brazil is pausing with the real still far from its pre-runoff levels and with fiscal names still empty. High real rates remain the main support under the currency while investors wait for a spending path and a finance minister.
What Copom said
The committee kept the benchmark at 13.75%, one of the highest among large emerging markets, and called the stance “substantially contractionary.” It flagged a “more pronounced deceleration of domestic economic activity,” said the outlook needs “serenity and caution,” and repeated that policy must stay “adequately restrictive” to bring inflation back to the 3% target.
Primary statement detail: Focus survey expectations for 2026 and 2027 had moved further from target (about 5.2% and 4.8%), and Copom’s own projection for the relevant horizon rose to 3.5%. Headline inflation is still running near 4.6%. Upside risks include sticky expectations, a weaker currency, and fiscal stimulus; downside risks include a sharper activity slowdown and a softer global backdrop.
FX tape
- USD/BRL ≈ 5.46 in London morning trade on 5 November (spot quote); Wednesday’s BCB PTAX sell rate was 5.4778
- Election-week move: roughly 4.97 into the 25 October runoff close, then a gap above 5.40 on 26 October — among the real’s sharpest weekly losses in years, per market reports
- Local rates and equities sold off with the currency after the surprise Lula turnaround; pre-vote pricing had leaned toward two more 25 bp cuts
With the easing bias gone from the statement, the near-term rate path is a pause until fiscal signals improve. Capital Economics’ William Jackson said Copom still hinted that easing could resume later if Brasília tightens the budget and cools expectations. Former central-bank director Fábio Kanczuk sees no cut at the next meeting without a clear fiscal announcement.
Why it matters for currencies
EM FX books already marked Brazil as a high-carry, high-fiscal-risk name after the runoff. Holding at 13.75% protects that carry, but the real’s post-election gap shows politics can overwhelm the rate advantage when the spending path is unclear. Lula has yet to name a finance minister or spell out how he hits primary surpluses while delivering campaign spending pledges; a televised fiscal message is flagged for Sunday without specific steps.
MoneyTurkey flagged the post-election rate-path reset earlier this week — see Brazil Rate Forecasts Rise After Lula Reelection — and the Treasury’s auction pause after the win (Treasury cancels auctions, buys back R$31.6bn). Wednesday’s Copom decision locks that pause into official policy until Brasília fills in the fiscal blanks.
What to watch
- Lula’s Sunday fiscal address — tone vs concrete steps
- USD/BRL around the 5.40–5.50 band and whether post-hold flows rebuild long BRL carry
- Next Copom statement for any return of an easing bias; Focus inflation and Selic paths
Related on MoneyTurkey
- Brazil Rate Forecasts Rise After Lula Reelection
- Brazil’s Treasury Cancels Auctions and Buys Back R$31.6bn After Lula’s Win
- Pound Hits Post-Brexit High as Dollar Slides on Democratic Midterm Sweep
For information only. Not investment advice.
Sources
- Banco Central do Brasil — Copom statement, 282nd meeting (4 Nov 2026): bcb.gov.br
- G1 — Copom holds Selic at 13.75%: g1.globo.com
- Reuters via Yahoo Finance: finance.yahoo.com
- BCB PTAX (4 Nov 2026): ptax.bcb.gov.br
