Persistent restrictive monetary policy, with the Selic rate at 13.75% after gradual cuts, continues to weigh on credit, investment, and domestic demand, positioning contraction or near-flat Q3 2026 GDP growth (QoQ) as the market consensus. Recent data reinforce this view: Q2 expanded just 0.5% sequentially while the August IBC-Br activity index rose only 0.3%, and institutions including IPEA now project Q3 near 0.1% QoQ amid softer services and industrial output. Downward revisions to full-year 2026 forecasts—to around 1.8–2.2% by the IMF, Finance Ministry, and Focus survey—reflect fading fiscal support and inflation still above the 3% target, keeping trader-implied odds concentrated on negative or minimal sequential readings ahead of the next Copom decision.