Bruno Serra, former Central Bank director and now portfolio manager at Itaú Asset, expects the bulk of Brazil's interest-rate cuts to come only after October's municipal elections. He told clients the oil shock is likely to lead policymakers to adopt a slower easing cycle at the start of the rate-cutting phase, diverging from earlier market expectations for more aggressive action.

The Central Bank has lowered the Selic benchmark by just 50 basis points since kicking off cuts in March. Serra projects policymakers will take borrowing costs to 11% by mid-2027, suggesting a more cautious approach than markets had anticipated. The modest reduction so far signals the bank's commitment to a measured pace amid external price shocks.

The timing of rate cuts matters for investors holding Brazilian bonds and equities. A slower easing cycle could support the real currency while limiting gains in rate-sensitive sectors like real estate and consumer finance. Corporate borrowers planning debt refinancing face uncertainty about financing costs through year-end as the central bank prioritizes price stability over rapid stimulus.