Despite tensions surrounding the war in the Middle East and the El Niño, Brazil’s Central Bank cut interest rates for the fifth consecutive time.

The Monetary Policy Committee unanimously reduced the Selic rate – Brazil’s benchmark interest rate – by 0.25 percentage points, to 13.75 percent per year.

Notícias relacionadas:

• Brazil’s August inflation comes in -0.32%, lowest in four years.
• Brazil’s economy grows 0.5% in second quarter of 2026.

“The external environment remains uncertain due to the ongoing armed conflicts in the Middle East and uncertainty regarding monetary policy in some advanced economies. This scenario calls for caution on the part of emerging economies in an environment marked by increased volatility in asset and commodity prices,” the statement said.

Inflation

The Selic rate is the Central Bank’s main tool for keeping official inflation – as measured by the Broad National Consumer Price Index (IPCA) – under control. In August, the index stood at -0.32 percent, the lowest level in four years. On a 12-month rolling basis, the index fell to 4.22 percent, down from 4.44 percent in July.

In the latest Monetary Policy Report, released in late June by the Central Bank, the monetary authority raised its IPCA forecast for 2026 from 3.9 to 5.2 percent, but the estimate will be revised due to the recent drop in inflation.

Market forecasts are less pessimistic. According to the Focus market readout – a weekly survey of financial institutions released by the Central Bank – official inflation is expected to close the year at 4.9 percent, above the upper limit of the target range of 4.5 percent. Before the start of the war in the Middle East, market estimates stood at 3.95 percent.

Selic

The benchmark interest rate is used in government securities trading within the Special System for Settlement and Custody (Selic) and serves as a guide for other interest rates in the economy. By raising it, the Central Bank curbs excess demand that puts upward pressure on prices, because higher interest rates make credit more expensive and encourage saving.

By lowering the benchmark interest rate, the Monetary Policy Committee makes credit cheaper and encourages production and consumption, but weakens inflation control. To cut the Selic rate, the monetary authority must be certain that prices are under control and not at risk of rising.

*Luciano Nascimento contributed to this article.

Brazilian beef exports fell 27.1 percent in volume in August compared to the same month in 2025, as per data released Friday (Sep. 4) by the Ministry of Development, Industry, Trade, and Services.

In value terms, the decline was 19.7 percent, with USD 1.2 billion exported during the month, compared to USD 1.5 billion a year earlier.

Notícias relacionadas:

• Brazil’s balance of trade posts USD 7.4 billion surplus in August.
• Ban on Brazilian meat and honey exports to Europe takes effect.
• Mercosur–Singapore deal secures zero tariffs on exports.

The decline comes after the foreign purchase quota set by China was reached. China limits the volume of meat that can enter the country to 1.106 million metric tons without the imposition of an additional 55 percent tariff.

The quota

According to Herlon Brandão, director for statistics and foreign trade studies at the Ministry of Industry, Commerce, and Services, the reduction in shipments had been expected as the limit set by China drew closer.

Despite the monthly decline, year-to-date performance for 2026 remains positive. From January through August, Brazil’s total exports of chilled and frozen meat grew 4.7 percent in volume and 22.3 percent in value compared to the same period last year.

Sales to Asia

China also influenced the overall performance of Brazilian exports to Asia. In August, shipments to the continent fell 19.2 percent compared to the same month in 2025. In value terms, the decline was 10.9 percent.

From January through August, however, the picture was different – Brazilian exports to Asia rose 15 percent in value and 3.3 percent in volume.

Brazil’s balance of trade posted a surplus of USD 7.4 billion in August, up 23.8 percent from the same month in 2025.

This is the third-largest trade surplus for the month of August, surpassed only by the record set in August 2023 (USD 9.6 billion) and August 2021 (USD 7.7 billion).

Notícias relacionadas:

• Brazil seeks to expand trade with Indian companies.
• Ban on Brazilian meat and honey exports to Europe takes effect.

The performance was mainly driven by growth in exports, which rose nearly 12.2 percent during the month, as per data released by the Ministry of Development, Industry, Trade, and Services.

The total tade flow – the sum of exports and imports – reached USD 58.9 billion, the highest figure ever recorded for the month of August in the current time series.

From January through August, the trade balance posted a surplus of USD 55.3 billion:

• Exports – USD 250.9 billion (+10.3%);
• Imports – USD 195.5 billion (+6.1%);
• Trade balance – USD 55.3 billion (+28.2%).

The balance is the second-highest for the period since the time series began, in 1989. It is surpassed only by January through August 2023, when the surplus stood at USD 62.4 billion.

The suspension on imports of animal products from Brazil into the 27 member countries of the European Union (EU) took effect Thursday (Sep. 3). The measure applies to beef, pork, and chicken, as well as honey, fish, and eggs, and could affect up to USD 2 billion per year in Brazilian exports.

However, the decision is not necessarily permanent. Brazil is working to demonstrate that it does meet European requirements. In addition, an EU audit is evaluating the country’s chicken and honey supply chains.

Notícias relacionadas:

• Brazilian exports hit record high, external account deficit falls.
• EU to ban Brazilian meat imports starting in September.
• Brazilian exports hit record high, external account deficit falls.

The restriction stems from the bloc’s view that Brazil’s mechanisms for controlling the use of antimicrobials in animal production are insufficient. The European Union has not identified any cases of contamination or health violations in Brazilian shipments.

The measure primarily affects the beef and chicken sectors, which account for a significant share of Brazilian exports to the European market.

Ban

The European Union has its own rules governing the use of antimicrobials in animal husbandry.

These medications can be used to treat infections, but the bloc prohibits their use to promote animal growth. It also does not allow antimicrobials intended for the treatment of infections in humans to be used in animals.

Europe claims that Brazil’s system for controlling these substances does not provide sufficient guarantees to verify compliance with the rules.

The Brazilian government, in turn, disputes this view and asserts that national legislation already restricts the use of antimicrobials as growth promoters, in line with international standards.

A sanitary problem?

The issue is not regarded as a sanitary problem. This is one of the main concerns raised by the decision.

The European ban was not announced due to the identification of contamination or a specific sanitary problem in Brazilian meat. The matter relates to the control and traceability mechanisms for the use of antimicrobials.

Therefore, the measure does not mean that Brazilian meat has been deemed unfit for consumption.

Brazil exports animal products to dozens of nations and remains authorized to sell to other markets that continue to approve Brazilian products.

Impact

The estimated potential impact amounts to USD 2 billion per year, taking into account the affected products.

Beef alone accounted for some USD 1.7 billion in Brazilian exports to the EU in 2025, as per the data in the report.

Even though the European market represents a limited share of Brazil’s total beef exports, it is considered strategic because it purchases higher-value-added cuts.

The problem for the sector is not simply finding another buyer. Different markets typically demand specific cuts, which makes it difficult to immediately replace sales destined for Europe.

Reaction

The Brazilian government has been negotiating with the European Union since the measure was announced. Among the steps taken are:

• a ban on certain antimicrobials;
• the creation of additional control regulations;
• a proposal for a transition period, which was rejected by the EU;
• the development of a traceability protocol; and
• verification of control over the use of antimicrobials during production.

According to the Brazilian Association of Meat Exporting Industries (ABIEC), all member companies authorized to export to the European Union have adopted the private protocol developed by the sector. It stipulates that animals must be tracked from birth through slaughter, enabling proof that certain antimicrobials were not used during their lifetime. The suspension may be lifted, but there is no set date for the resumption of exports.

Audits

EU officials will conclude an audit in Brazil this Friday on the chicken and honey production chains. The results will be reviewed by European authorities. This may take two months.

If the EU determines that the requirements have been met, Brazil may be reinstated on the list of countries authorized to export.

As for honey, Brazilian exports to the EU doubled in the first half of 2026, reaching USD 6.3 million, the Brazilian Association of Honey Exporters (Abemel) reported.

The growth was partly due to additional tariffs imposed by the US, which have made that market more expensive for Brazilian exporters, prompting companies to redirect sales to Europe.

One of the risks assessed by the industry is cross-contamination. This can occur, for instance, when beehives are located near livestock farming areas where certain products are used.

For beef, the resumption of operations may take longer, as the new system requires tracking throughout the animal’s entire life cycle. A head of cattle that begins to follow the new rules today may take 24 to 36 months to reach slaughter.

Therefore, even if the EU lifts the ban, it may take years for the beef supply chain to adapt to the new requirements.

In the case of chicken, the production cycle is much shorter – some 45 days from hatching to slaughter.

Outlook

The poultry sector expects that sales to the European Union may resume as early as 2026, depending on the outcome of the audit.

If the ban remains in place, the production that would have been destined for European markets could be redirected to the Brazilian market, countries in the Middle East, and other international markets.

Brazil exports chicken meat to about 150 countries, which provides alternatives for part of its production.

Partner countries

The ban does not automatically apply to all of Brazil’s trading partners.

Brazil’s Mercosur partners – Argentina, Paraguay, and Uruguay, for instance – remain authorized to export animal products to the European Union.

The decision also comes amid trade discussions between the EU and Mercosur. As a result, representatives of the Brazilian agribusiness sector describe the measure as protectionist, while European officials maintain that it is simply a matter of complying with regulatory requirements.

Brazil on Monday (Aug. 31) reiterated its dissatisfaction with the tariffs imposed by the United States and stated that Washington’s measures are discriminatory and incompatible with international trade rules.

This position was presented by Foreign Minister Mauro Vieira and Minister of Development, Industry, Trade, and Services Márcio Elias Rosa during a virtual meeting with US Trade Representative Jamieson Greer.

Notícias relacionadas:

• Brazil, US to discuss tariffs at WTO.
• Brazil says US tariffs violate WTO rules.
• Brazil seeks to expand trade with Indian companies.

In a joint statement, the ministries deemed the treatment of Brazil unfair and said that the justifications presented in the US investigations do not reflect actual Brazilian practices.

“Once again, [Ministers Mauro Vieira and Márcio Elias Rosa] pointed out that the justifications presented by the US government in the conclusions of the investigations conducted under Section 301 of the US Trade Act do not reflect actual Brazilian practices, and that the discriminatory treatment imposed on Brazil is unfair,” the two ministries emphasized in a joint statement.

Dialogue continues

Despite their differences, the two countries decided to continue negotiations. Technical meetings will be held in the coming weeks, either virtually or in person, followed by another ministerial meeting to assess progress.

The Brazilian government stated that it will continue to seek “a balanced and mutually beneficial agreement” with the United States, based on dialogue and respect for national sovereignty.

The resumption of talks follows a phone call between Presidents Luiz Inácio Lula da Silva and Donald Trump on August 21. During the call, Lula once again contested the tariffs, and Trump proposed resuming negotiations.

Brazil is subject to an additional 25 percent tariff imposed specifically by the US government and another 12.5 percent surcharge, which Washington justified on grounds related to combating forced labor.

The first measure was based on an investigation by the Office of the US Trade Representative (USTR), which pointed to alleged unfair trade practices by Brazil in areas such as electronic payments (Pix) and access to the ethanol market. The Brazilian government rejects these arguments and considers the measure unjustified.

The dispute is also unfolding amid growing economic competition between the United States and China for influence in Latin America, adding a geopolitical dimension to the negotiations between Brasília and Washington.