Will the Bank of Brazil make no change to the target for the Selic rate at the December meeting?

The market resolves Yes if Brazil's central bank (BCB) leaves the Selic target unchanged at its December Copom meeting. It trades at 31% against our 55% estimate, a 24-point edge toward 'no change'. Context: Brazilian inflation has cooled toward the target band, but fiscal risks and a weak real limit room to maneuver, and recent Copom signals pointed to a pause rather than a pivot in the cycle.

Key drivers behind our estimate: core inflation is trending down, the real policy rate remains deeply positive, and global conditions (Fed expectations) ease pressure on emerging-market currencies. Historically Copom rarely changes the rate at the final meeting of the year without a clear trigger, and the BCB itself has stressed caution in recent communications. At 31%, the market appears to price a meaningful probability of a cut, which looks overstated.

For the outcome to win, Copom simply needs to vote to hold Selic. The main risk is a sharp deterioration in inflation expectations or a fiscal shock forcing a hike, or conversely fast disinflation pushing toward a cut. The vote composition and the tone of the statement also matter: a hawkish shift could change the calculus. If inflation and expectations stay near target, a pause is the most likely outcome, and the current price underprices that scenario.