Brazil rate cut bets surge as options price 25bp Selic reduction in August

Derivatives markets have shifted sharply toward an August easing, pricing a 75.5% probability of a quarter-point cut as disinflation data strengthens the case for policy normalization.

By Handelsavisen Newsroom · Automated 2026-07-20 11:30 UTC · 1 min read

Trading in B3’s Copom options has swung decisively toward an interest rate cut in August, with the market now assigning a 75.5% probability to a 25-basis-point reduction in Brazil’s benchmark Selic rate.

This represents a sharp reversal from a month ago, when traders were far less convinced the central bank would move so quickly.

64% in June, falling below all economist forecasts in a Bloomberg survey, while the mid-month gauge rose just 0.

The repricing reflects growing confidence that the Central Bank of Brazil (BCB) will resume its easing cycle after a period of pause.

The shift in derivatives positioning underscores how rapidly market expectations are adjusting to the latest macroeconomic data, which has consistently pointed toward cooling price pressures across the economy.

This move follows a series of softer-than-expected inflation prints that have bolstered the argument for earlier policy action.

Brazil’s annual inflation rate decelerated to 4.64% in June, falling below all economist forecasts in a Bloomberg survey, while the mid-month gauge rose just 0.41% in early June, marking a second consecutive month of disinflation.