Inflation slips back into the target range, opening the door to another cut
Mid-August prices posted their first monthly decline in a year, giving the central bank room to keep easing.
Brazil's mid-month inflation gauge, the IPCA-15, fell inside the central bank's tolerance band in the August reading. Prices declined outright versus the previous month, the first monthly drop the index has recorded in a year.
The print matters because the Copom has made its next move explicitly data-dependent. A reading inside the band, arriving weeks before the September meeting, removes one of the main arguments for pausing the easing cycle that began earlier this year.
The risk on the other side is the currency and the external accounts. A wider current-account gap and a still-hot labour market mean the committee is unlikely to accelerate the pace of cuts, but the direction of travel now looks clearer.
Watch the full-month IPCA in early September for confirmation that the decline was broad-based rather than driven by one or two volatile components.