Brazil central bank cuts benchmark rate 25 basis points to 14.00%

Brazil’s central bank cut the Selic benchmark rate by 25 basis points to 14.00% at its August meeting, delivering a fourth straight reduction while signaling caution on the pace of further easing. Copom said future decisions will depend on incoming data and reiterated the need to maintain an appropriate degree of monetary restraint to ensure inflation converges to target, while highlighting elevated global uncertainty. After the decision, the Ibovespa fell 1.2% to 175,546 on Thursday and then dropped 1.7% to close at 177,513 on Friday as investors digested another batch of second-quarter 2026 earnings and looked ahead to Copom minutes due Tuesday for further clues on the Selic path. Petrobras shed 3%, reversing earlier gains despite one of its strongest recent earnings reports and an earnings beat, as investors questioned how sustainable that performance would be after much of the upside had already been priced in. Localiza fell 0.8% despite reporting R$1 billion in net profit, up 30.6% from a year earlier. Magazine Luiza dropped 3.7% on weak results and profitability concerns, while Renner plunged 8.1% after cutting guidance amid worries over sales. Vale fell 0.6% despite higher iron ore prices, and banks also declined broadly, led by Bradesco, down 2.2%, and Itaú Unibanco, down 2.6%. Brazil’s 10-year government bond yield had risen to 14.52% from the three-week low of 14.42% reached on August 4 as investors absorbed the central bank’s cautious guidance, while resilient labor data and fiscal concerns continued to reinforce expectations that rates may remain restrictive.