We are in the middle of the most significant rate-cutting cycle since 2019. The Selic fell from 15% to 14.75% in March, the April meeting is just three days away, and the market projects the rate reaching 12.50% by December. For investors who track each meeting in isolation, that fragmented focus can cost real returns. The full cycle needs to be understood as a whole — not as eight separate decisions.
This article covers everything that has happened so far, the complete calendar of remaining meetings, stage-by-stage projections, and what concretely changes for each asset class as rates come down.
What has happened so far
The 2026 cutting cycle began cautiously. At the January 27–28 meeting, the Copom held the Selic at 15%, choosing to wait for more data on inflation and the exchange rate before starting cuts. The committee's statement was read by the market as a signal that cuts were coming — but that the pace would depend on the path of the IPCA.
Inflation was already showing signs of strain at that point. The IPCA accumulated over the prior 12 months was above the formal target ceiling of 4.50%, and the real was still trading under pressure. The Copom prioritized credibility over speed.
At the March 17–18 meeting came the first cut: 0.25 percentage points, bringing the Selic from 15% to 14.75%. The cut was deliberately modest. The Copom signaled that the decision reflected a balance between the start of a disinflation cycle and uncertainty about the future trajectory of prices. It was the smallest possible move — the market interpreted it as a sign that the committee wanted to begin the cycle without telegraphing an aggressive path.
Two factors contributed to March's timid cut:
- The IPCA running at 4.71%, above the formal target ceiling of 4.50%
- Geopolitical uncertainty around the Iran-Israel conflict, which had pushed oil prices above $112 per barrel before the April 8 ceasefire
The April meeting (28–29) — what to expect
The April 28–29 meeting is the next inflection point in the cycle. The market, as reflected in the Focus Bulletin of April 13, projects a cut of 0.50 percentage points, which would bring the Selic to 14.25%.
What has changed since March to justify a larger cut:
Geopolitical relief and the exchange rate: The US-Iran ceasefire on April 8 eased pressure on oil prices and opened the door for the real to appreciate, pulling back below R$5.00 in mid-April. A stronger currency reduces the pass-through of international prices into domestic inflation.
Ibovespa at all-time highs: The Ibovespa trading near 200,000 points reflects a risk-on environment that gives the Copom room to act without generating market instability.
Stable Focus projections: Despite the IPCA at 4.71%, the market still projects the Selic ending 2026 at 12.50% — a sign that the consensus believes the cutting cycle will continue.
The main risk heading into the April meeting remains inflation above the target ceiling. If the Copom's statement signals caution about the pace of future cuts, the market may read it as hawkish even with a 50 basis-point cut on the table.
Full Copom calendar for 2026
The Copom has eight scheduled meetings in 2026. Two have already taken place; six remain. The table below consolidates the historical record and market projections:
| Meeting | Date | Decision / Projection | Selic after meeting |
|---|---|---|---|
| 1st | Jan 27–28 | Held | 15.00% |
| 2nd | Mar 17–18 | Cut 0.25pp | 14.75% |
| 3rd | Apr 28–29 | Projection: cut 0.50pp | 14.25% |
| 4th | Jun 16–17 | Projection: cut 0.50pp | 13.75% |
| 5th | Aug 4–5 | Projection: cut 0.50pp | 13.25% |
| 6th | Sep 15–16 | Projection: cut 0.25–0.50pp | 12.75–13.00% |
| 7th | Nov 3–4 | Projection: cut 0.25pp | 12.50–12.75% |
| 8th | Dec 8–9 | Projection: hold or cut 0.25pp | 12.50% |
Projections based on the Focus Bulletin of 04/13/2026. Subject to revision based on inflation data, exchange rate movements, and global conditions.
The September and November meetings deserve special attention. The second half of 2026 brings a political variable that was absent in the first: the October elections. In election years, the Copom has historically adopted a more cautious stance in the second half to avoid being seen as easing monetary policy under political pressure. That does not prevent cuts — but it tends to moderate them.
Where the Selic goes by December
The market consensus, as recorded in the Focus Bulletin, projects the Selic ending 2026 at 12.50%. From the current rate of 14.75%, that represents a total reduction of 2.25 percentage points over the course of the year, spread across six meetings.
The cycle math:
- January through March: -0.25pp (realized)
- April through December (projection): -2.00pp additional
- Full-year total: -2.25pp
For the cycle to land exactly at 12.50%, the pace needs to be calibrated. The market's base case is:
- Cuts of 0.50pp at the April, June, and August meetings (the most aggressive phase of the cycle)
- A slowdown to 0.25pp in September and November (electoral caution and inflation vigilance)
- A possible hold or final cut in December to reach the target level
This pace reflects an optimistic view of inflation's trajectory. For the IPCA to come down from 4.71% to within the target band by year-end, the effect of currency appreciation, energy price moderation post-ceasefire, and cooling services inflation all need to converge. Any deterioration in those factors could force the Copom to pause the cycle ahead of schedule.
It is worth acknowledging what the Focus cannot do: predict surprises. Geopolitical developments in the Middle East evolved in unpredictable ways throughout 2025 and early 2026. A reversal of the ceasefire, a commodity price spike, or a domestic electoral crisis could shift the picture quickly.
What changes for each type of investment
The impact of a falling Selic is not uniform across asset classes. The transition from 15% to 12.50% is significant, but it still leaves rates in historically elevated territory. Investors need to understand at which interest rate level each asset class starts to become more attractive:
Tesouro Selic and floating-rate CDB
These instruments are most directly affected: every cut reduces the gross yield in real time. Tesouro Selic currently yields roughly 14.65% per year; if December's projection holds, that will fall to roughly 12.40%.
For investors who use these products as an emergency fund or for short-duration allocations, the practical implication is that the opportunity cost of not being in equities will gradually decline. Even so, with the Selic above 12%, the real return (after stripping out IPCA) remains positive — fixed income does not lose its appeal overnight.
Tesouro IPCA+ and fixed-rate bonds
These instruments benefit from a rate-cutting cycle. Buying Tesouro IPCA+ at a yield above 6% per year today locks in that real return regardless of where the Selic lands in December. If rates fall as projected, the market price of those bonds rises (positive mark-to-market).
The same applies to fixed-rate bonds: Tesouro Prefixado 2028 currently trading around 13.5% per year will appreciate if market rates pull back to 11.5%–12% over the course of the cycle.
The risk runs in the opposite direction: if inflation surprises to the upside and the Copom pauses cuts, these bonds suffer negative mark-to-market. For investors who plan to hold to maturity, that risk is irrelevant — the return locked in at purchase is guaranteed. For those who may need to redeem early, price volatility matters.
FIIs (Real Estate Investment Funds)
FIIs are the sector that benefits most structurally from falling rates, through two simultaneous mechanisms:
- Discount rate compression: lower rates mean future cash flows are worth more today, pushing up the net asset value of funds
- Allocation migration: investors who were satisfied with 15% fixed-income yields begin to chase the 8–10% average yields of FIIs, which offer personal income tax exemption and potential unit appreciation
Historically, paper FIIs (those holding CRIs and other real estate credit instruments indexed to CDI or IPCA) tend to see dividends fall as the CDI drops. Brick FIIs (shopping centers, logistics warehouses, corporate office buildings), on the other hand, benefit both from rate compression and from the potential for lease revisions above inflation.
A Selic below 13% is the level that has historically acted as a trigger for more intense capital inflows into FIIs. We are not there yet — but the projected cycle suggests that threshold could be reached in the second half of the year.
Equities and the Ibovespa
With the Ibovespa near 200,000 points, the equity market has already priced in part of the cutting cycle. That does not mean there is no upside — it means the opportunities are more stock-specific than a broad index bet.
The sectors that benefit most from lower rates are those with long-duration cash flows discounted at high rates: homebuilders, utilities (energy and sanitation), and growth companies with debt on their balance sheets. Banks have a more mixed picture: they benefit from the economic expansion that cuts tend to generate, but face spread compression in certain lending segments.
Commodity exporters (Petrobras, Vale, Suzano) are less sensitive to the domestic Selic — their performance is driven primarily by the exchange rate and international commodity prices.
The risks to the cycle
No rate-cutting cycle travels in a straight line. The main risks that could alter the projected path:
Persistently elevated inflation: The IPCA at 4.71% is a real data point, not a projection. The Copom cannot systematically ignore inflation above the target ceiling without paying a credibility cost. If the next IPCA readings show acceleration — especially in the services and food components — the pace of cuts may slow.
Geopolitical reversal: The Middle East ceasefire provided meaningful relief for oil prices and the Brazilian real. A deterioration on that front — whether through a resumption of the conflict or new global flashpoints — could push oil higher again and pressure the real, creating headwinds for the cutting cycle.
Electoral dynamics: 2026 is an election year. The October presidential elections create uncertainty around fiscal and regulatory policy. Pre-election public spending increases can put pressure on both inflation and the exchange rate, forcing the Copom to be more conservative in the second half. Brazil's historical record shows that markets typically price in higher risk premiums in the months leading up to closely contested presidential elections.
Fiscal deterioration: The level of Brazil's public debt and the primary deficit remain background variables that markets monitor closely. Negative fiscal surprises push up country risk, pressure the exchange rate, and narrow the Copom's room to cut.
The strategy for the full cycle
The temptation to react to each Copom meeting individually is understandable — but it tends to be less effective than positioning a portfolio for the cycle as a whole.
A few guidelines Sidnei Oliveira applies when thinking through rate-cutting cycles:
Anticipate, do not react: The best entry points in FIIs, fixed-rate bonds, and rate-sensitive equities usually come before the cuts materialize, not after. Markets discount expectations, not decisions already made. Investors who wait to see the Copom cut before positioning themselves typically buy at higher prices than those who anticipated the trend.
Scale in, do not concentrate: With six meetings still ahead and genuine uncertainty about the pace, allocating gradually throughout the cycle — rather than all at once before April — reduces the risk of being wrong about the speed of cuts without giving up participation in the move.
Distinguish what has already been priced: The Ibovespa near 200,000 points already reflects positive expectations. Stocks in sectors that have not yet moved as much as forward rates project may offer more asymmetry. Similarly, FIIs still trading at a discount to net asset value may have more to gain than those whose yields have already compressed.
Do not abandon short-term fixed income: With the Selic still at 14.75%, the cost of sitting out fixed income is real. A well-structured portfolio for this cycle likely maintains short-term fixed income (for liquidity and current yield) while gradually increasing exposure to assets that benefit more from later stages of the cycle.
Keep a reserve for surprises: Cycles do not end as planned. A liquidity reserve is not an allocation mistake — it is what allows you to take advantage of the entry points that unexpected volatility creates.
The Selic rate-cutting cycle in 2026 is real, it is underway, and it has the potential to continue across six more meetings. But the distance from 14.75% to 12.50% will be covered with fluctuations, revised expectations, and at least one or two moments when the market questions whether the Copom can stick to the script. That noise is part of the process — and investors who understand the full cycle are better equipped not to be thrown off by it.
Royal Binary is a collective investment platform. This content is for educational purposes only and does not constitute investment advice. Consult a certified advisor before making financial decisions.