Brazil’s central bank has cut the Selic rate by 25 basis points at each of its last two meetings, bringing the benchmark to 14.50 percent as of the April 29 decision, and market-implied odds now assign a 76.5 percent probability of another reduction at the June 17 Copom meeting. The primary driver remains the transmission of prior restrictive policy into slower GDP growth, projected at 1.6 percent for 2026, alongside resilient yet cooling labor-market conditions that have allowed the committee to begin a cautious easing cycle despite headline inflation and 2026 expectations remaining above the 3 percent target. Geopolitical uncertainty surrounding Middle East oil shocks has elevated inflation risks and prompted hawkish language in recent minutes, keeping no-change odds at 23.4 percent while virtually eliminating any hike scenario at 0.7 percent. Traders will closely watch the May IPCA release and incoming activity data for confirmation that downside growth risks continue to outweigh upside price pressures ahead of the mid-June vote.