REGRESA

1. COPOM confirms the start of a cycle of interest rates cuts

The minutes of the latest meeting of the Monetary Policy Committee (COPOM) confirmed that the Central Bank (BC) intends to begin a Selic rate-cutting cycle in March, after keeping interest rates at 15% per year for the fifth consecutive meeting. According to the BC, the decision was based on the improvement in the current inflation outlook, the decline in inflation expectations, and clearer signs of monetary policy transmission to the economy. Even so, the committee avoided anticipating the size or duration of the easing cycle, noting that these decisions will depend on the incorporation of new data over time.

The document reinforces that, even with the prospect of lower interest rates – the market projects the Selic at 14.5% as early as March and at 12.25% by the end of 2026 – monetary policy will remain in restrictive territory until inflation’s convergence to the target is assured. The BC emphasized the need for caution given the resilience of the labor market, external uncertainties, and domestic fiscal risks, and reiterated that the slowdown in economic activity is part of the inflation-control strategy. The monetary authority also reiterated the importance of coordination between fiscal and monetary policy as an essential condition for anchoring expectations and ensuring price stability.

G1: Ata do Copom: BC confirma sinalização de corte de juros em março, mas não dá pistas sobre tamanho do ciclo

2. Ibovespa suffers sharp decline

The Ibovespa posted its worst performance of 2026 this Wednesday, falling 2.14% to 181.7 thousand points, amid heavy profit-taking and increased risk aversion. The drop was driven mainly by the financial sector. Santander’s earnings reignited concerns over loan defaults and asset quality, dragging down shares of Itaú, Bradesco, and Banco do Brasil. Retail stocks also traded lower, reflecting signs of exhaustion following the market’s recent rally and weaker activity data in the services sector.

The external backdrop was also unfavorable. On Wall Street, indexes closed with mixed results, with a continued rotation out of technology stocks, while new US labor market data reinforced uncertainty about the pace of the economy. In Brazil, fiscal discussions and concerns over the Central Bank’s independence added pressure to domestic assets. The commercial dollar remained stable at R$ 5.25, and futures rates ended the day without a clear direction amid heightened investor caution.

InfoMoney: Ibovespa tem o pior dia do ano, com baixas de bancos e varejo

3. Public debt rose in 2025

Gross general government debt ended 2025 at 78.7% of GDP, equivalent to R$10 trillion, according to Central Bank data. This represents an increase of 2.4 percentage points compared to the previous year, driven mainly by the incorporation of nominal interest, partially offset by nominal GDP growth and exchange rate appreciation. In December, there was a slight month-on-month decline, reflecting net debt redemptions and the positive impact of economic activity.

Net public sector debt rose to 65.3% of GDP, an increase of 4 percentage points over the year, influenced by interest costs, accumulated exchange rate appreciation, and the primary deficit. In 2025, the consolidated public sector posted a deficit of R$55 billion, the largest since 2023, with shortfalls in the central government and state-owned companies, partially offset by a surplus from states and municipalities.

CNN Brasil: BC: Dívida bruta do governo geral sobe e fecha 2025 em 78,7% do PIB

4. Services foreign trade reaches new peak

Brazilian services exports totaled US$51.8 billion in 2025, the highest level in the historical series, according to data from the new ComexVis Services panel launched by the Ministry of Development. About 65% of the total came from digital services, highlighting the sector’s growing importance in the country’s international integration. The tool brings together new and detailed data on services foreign trade, increasing transparency and enabling analysis by sector, trading partners, and historical trends.

Despite the advance, Brazil continues to run a structural deficit in its services balance. In 2025, imports reached US$104.7 billion, resulting in a negative balance of nearly US$53 billion and contributing to the external accounts deficit. Even so, the export record helps reduce dependence on external capital, traditionally offset by trade surpluses and foreign direct investment, which rose again last year.

Agência Brasil: Exportações de serviços batem recorde e alcançam US$ 51,8 bi em 2025

5. Industry loses momentum and recovery moves further away

Brazilian industry ended 2025 on a weaker footing, pressured by high interest rates, moderate demand, and increased competition from imported goods. IBGE data show a 1.2% drop in production in December and growth of just 0.6% for the year, well below the expansion recorded in 2024. Analysts note that restrictive monetary policy affected investment and consumption decisions, with a stronger impact on credit-sensitive sectors such as capital goods and durable goods, which led the losses at year-end.

According to the National Confederation of Industry (CNI), the outlook remains challenging, even with expectations of the start of a Selic rate-cutting cycle in 2026. The organization believes that interest rate reductions will be gradual and insufficient to quickly unlock activity, keeping industry under a “heavy anchor” at least until 2027. In addition to credit costs, the CNI highlights rising imports as another source of pressure, while economists project a slow and uneven recovery throughout 2026.

Valor Econômico: Produção industrial cresce 0,6% em 2025, diz IBGE
InfoMoney: Indústria brasileira desacelera e CNI prevê ‘âncora pesada’ até 2027