REGRESA

1. Copom cuts Selic rate to 14% per year

The Monetary Policy Committee (Copom) of the Central Bank cut the Selic benchmark interest rate from 14.25% to 14% per year, the fourth consecutive rate cut. The decision, which the market expected, brought the rate to its lowest level since March 2025 and was justified by the strategy of bringing inflation back to its target while also seeking to reduce volatility in economic activity and support job creation.

Despite the cut, the Central Bank maintained a cautious tone and stated that future decisions will depend on inflation trends and the international scenario, which remains marked by uncertainties such as conflicts in the Middle East and monetary policy decisions by advanced economies. The market expects the Selic rate to end 2026 at 13.75% per year, although inflationary risks continue to keep Brazilian interest rates among the highest in the world in real terms.

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2. Market reacts cautiously to Selic rate cut

The dollar fell and the Brazilian stock market declined following Copom’s decision to cut the Selic rate to 14% per year, the fourth consecutive interest rate reduction. As the measure had already been anticipated, the market’s reaction was driven mainly by the Central Bank’s statement, which avoided signaling the next steps for monetary policy and reiterated that future decisions will depend on inflation trends and the economic outlook.

The Central Bank’s cautious stance kept investors in a wait-and-see mode amid uncertainties surrounding inflation, the conflict in the Middle East, and monetary policy decisions in developed economies. Analysts believe the market will remain sensitive to the release of economic indicators and corporate earnings, while expectations remain for another 0.25 percentage point cut in the Selic rate before a possible pause in the rate-cutting cycle.

Folha de S.Paulo: Dólar cai e Bolsa recua após decisão do Copom sobre a Selic

3. Household debt reaches record high of 82%

The percentage of Brazilian families with some type of debt reached 82% in July, the highest level in the historical series of the National Confederation of Trade in Goods, Services and Tourism (CNC), marking the sixth consecutive month of record levels. Despite the increase in indebtedness, delinquency rates showed a slight decline, falling to 29.8%, while the average time of payment delays also decreased. On average, 29.5% of household income is committed to debt payments, mainly through credit cards, which account for more than 85% of indebtedness cases.

The survey shows that the issue is more severe among lower-income families, which record higher levels of both indebtedness and delinquency. According to CNC, the recent reduction in the Selic rate may improve credit conditions and facilitate debt renegotiations, but the effects are expected to be gradual, as the high share of income committed to debt limits the recovery of households’ consumption capacity.

Agência Brasil: CNC: endividamento das famílias sobe para 82%, mas inadimplência cai

4. Industrial production posts largest decline in six months

Brazilian industrial production fell 1.8% in June compared with May, according to IBGE, marking the largest decline in six months and the indicator’s second consecutive drop. The contraction was widespread across sectors, with declines particularly affecting consumer goods and segments such as petroleum derivatives, chemicals, food, pharmaceuticals, and apparel. Despite the downturn, industry output still accumulated a 1.5% increase in the first half of 2026.

Economists believe the result reflects a slowdown in economic activity, mainly driven by the high interest rate environment, which is limiting investments and consumption of financed goods. Despite expectations of further Selic rate reductions, the sector faces a more challenging environment, although some segments, such as pulp and paper and metallurgy, recorded growth and helped offset part of the losses.

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5. Court-supervised recoveries rise among small businesses

Court-supervised recovery, once a solution mostly used by large corporations, have become increasingly common among micro and small businesses. Between 2023 and 2026, the share of microenterprises undergoing the process more than doubled, while small businesses increased by 69% and medium-sized companies grew by 31%. The trend comes amid a scenario of high interest rates, more expensive credit, and greater pressure on the cash flow of smaller companies, which have less access to alternative sources of financing.

The total number of companies undergoing court-supervised recovery reached 6,341 in the first half of 2026, up 21.2% over 12 months, although recent data indicates signs of a slowdown. While large companies have been turning to out-of-court restructuring, considered faster and less costly, smaller businesses face challenges due to the expenses involved in the process and the lack of simplified mechanisms. Agribusiness, retail, and industry remain the sectors most affected by restructuring efforts.

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