Brazil’s central bank cut its benchmark interest rate by 25 bps to 13.75% at its September meeting, in line with market expectations. The bank noted that the external environment remains uncertain due to the lack of clarity surrounding armed conflicts in the Middle East and uncertainty over monetary policy in some advanced economies. Domestically, indicators released since the previous meeting point to a gradual moderation in economic activity, particularly in more cyclical sectors, although activity remains resilient and the labor market remains tight. Recent data show that headline inflation and the average of underlying measures have slowed, standing below the upper bound of the tolerance interval but still above the target. The Copom reiterated that the current scenario, marked by significantly higher uncertainty, deanchored inflation expectations, and elevated risks around the baseline scenario, calls for caution.