05.11.202614:31:02UTC+00Real Trades Sideways as BCB Signals Caution on Inflation and Growth

In November, the Brazilian real fluctuated narrowly around R$5.45, hovering near its lowest levels since January after the BCB left the Selic rate unchanged at 13.75%, halting its easing cycle. The pause underscored a challenging backdrop of weaker growth, higher inflation, and elevated uncertainty following President Lula’s reelection. Market expectations were split: while some investors anticipated a pause, others had priced in a sixth consecutive 25 bps cut. Policymakers pointed to worsening inflation expectations, rising uncertainty, and a “more pronounced deceleration” in economic activity. The still-high interest rate continues to underpin the real by preserving a wide yield differential that draws foreign carry-trade inflows. At the same time, the Copom statement emphasized both the economic slowdown and the uncertainty clouding its own forecasts. Labor market data reinforced signs of cooling activity, with Brazil creating 121,305 formal jobs in September, well below the consensus estimate of 171,000.