XP is working with a scenario in which the Central Bank should not interrupt the cycle of Selic cuts. In the firm's assessment, the Copom will conduct monetary easing continuously until the basic interest rate reaches 13.25% per year at the end of 2026.
This understanding is based on two movements that have been gaining traction: the loss of momentum in the Brazilian economy and the cooling of domestic inflationary pressures. For XP, this combination opens room for consecutive reductions, without the pauses that marked other moments of the cycle.
One cut after another, without a pause
The projection contradicts the reading of part of the market, which still considers interruptions to evaluate the effects of each decision. According to XP, the Copom tends to maintain the downward trajectory in a linear manner, taking advantage of the window created by the slowdown in activity.
- Continuous trajectory: successive cuts, without interruptions along the way.
- Target: Selic at 13.25% per year at the end of 2026.
- Main driver: combination of weaker activity with decelerating inflation.
What sustains the thesis
Domestic economic activity shows signs of accommodation after a period of resilience above expectations. This cooling tends to ease pressure on prices and services, which reinforces the thesis that monetary tightening has already played a good part of its role.
On the inflation side, the reading is of gradual loss of intensity. Current indicators have been showing less widespread increases, although convergence to the target still requires patience.
> The combination of less heated demand and decelerating prices is what supports the cycle of cuts projected by XP.
Cautious tone in the statement
Despite the expectation of cuts without pause, XP warns that the official discourse should maintain a prudent bias. The Copom's communication tends to reinforce data dependence and the absence of automatic commitment to a predefined pace.
This caution serves a strategic function: it preserves the authority of monetary policy in the face of possible surprises and prevents the market from pricing in a path that is too rigid. In previous statements, the committee has made clear that it monitors the evolution of indicators decision by decision.
The external scenario as a risk variable
The international environment remains the main source of uncertainty. The conduct of monetary policy in major economies, exchange rate volatility and fluctuations in risk markets can alter the pace of projected cuts.
For XP, this picture does not invalidate the central projection, but it imposes caution. More intense external noise could require adjustments in the speed of easing, although the direction remains the same.
Effects for credit and investments
If the projection is confirmed, the chain of cuts tends to produce gradual effects on the economy:
- Credit: more favorable financing conditions over the projected horizon.
- Fixed income: recalibration of public bond premiums as the yield curve adjusts.
- Activity: moderate stimulus to consumption and investment, without risk of abrupt overheating.
XP's reading is of a slow process dependent on data confirmation, rather than immediate relief. Each Copom decision will be calibrated as inflation and activity evolve.
What to watch from here on
The market should monitor three main fronts: the speed of the slowdown in activity, the behavior of core inflation, and the intensity of external shocks. These variables will determine whether the linear path to 13.25% remains intact until the end of 2026 or whether the committee will need to recalibrate its pace.
For now, XP's bet is clear: no pauses, with prudence in the discourse and eyes turned to the data.