What worries Brazilians the most? Hint: it's not inflation, cost of living, or high prices.

The market "prices" assets and financial transactions daily in both multi-billion dollar and small-scale deals, but this is out of sync with the main concerns of Brazilians. Interest rates create noise and stifle the economy. However, they don't significantly impact election polls because they involve technical discussions and are not always associated with government decisions.

The "criticism" of interest rates falls on the shoulders of the Central Bank (BC) and banks in general, which are responsible for granting and collecting loans at exorbitant rates, especially personal loans such as credit cards, which have little to do with the Selic rate and fleece debtors who flirt with default and end up being "rescued" by the government. In March, credit card interest rates reached 94.3% per year and 432.1% for revolving credit card customers.

Although vital indicators for decision-making that affects families and businesses, interest rates, inflation, and government spending are far from competing for space with the three "main problems" of the Nation pointed out by the BTG Pactual /Nexus 2026 Elections Opinion Poll, conducted throughout the country between June 12 and 14 and released on Monday, June 15.

In descending order of relevance in the survey with more than 2,000 respondents, when asked what is the main problem in Brazil today in a spontaneous response and what is the second main problem in multiple responses, for 33% in total the trio " security, violence and crime " tops the list; 25% point to "public health"; and 23% to "corruption".

" Inflation , cost of living, and high prices" are cited by 11% as one of the main national problems; 4% mention "public spending and government spending"; and 2% of respondents consider "interest rates and rising interest rates" a major problem.

This signal provides direction for the election campaigns that will officially begin in two months. And at this moment, President Lula, the pre-candidate for re-election, has an advantage in the first and second round of voting over his main opponent so far, Senator Flávio Bolsonaro.

“Lula’s advantage is mainly due to the fact that he controls the public machine, while Flávio loses votes and reputation for having asked for money for the biopic of his father, former president Jair Bolsonaro, from the owner of Master, Daniel Vorcaro , sponsor of the biggest, and still poorly explained, financial scandal in the country. The bank is in extrajudicial liquidation due to fraudulent activities that compromise authorities and led to an estimated loss of R$ 50 billion among unsuspecting savers and investors,” assesses a political scientist on condition of anonymity.

Lula's position is strengthened, according to the expert, by the fact that the government is deepening its "positive agenda." This involves launching numerous measures that sponsor an estimated injection of between R$ 200 billion and almost R$ 300 billion into the economy, depending on the calculations. "And, with the expectation that, sooner rather than later, these resources disguised as various social programs will make a difference to the poorest Brazilians and the middle class that Lula seeks to win over or retain."

Copom explicit and conservative

The initiatives, which favor Lula in the electoral race, will, however, have lasting repercussions for both good and bad on the economy. The gradual disbursement of resources will greatly contribute to sustaining – via demand – the activity that threatens to falter in the second half of the year, but with a clear and certain effect on inflation.

To illustrate the magnitude of these decisions, by 2026 these fiscal and parafiscal stimulus measures – which, in a simplistic definition, operate outside the budget – will have an impact equivalent to 1% of GDP on demand, according to BTG Pactual's calculations. Over time, the effect could reach 2% of GDP.

Government actions will weigh on inflation, which continues to rise and worsens projections as far as the eye can see, explaining the Central Bank's caution in managing interest rates. In the Copom statement, released after the announcement of the Selic rate reduction to 14.25% on Wednesday, the 17th, the bank was explicit about the upward effect on inflation of "demand stimuli" that weaken "some of the usual channels of monetary policy transmission".

The Copom (Monetary Policy Committee) was also explicit in pointing out the risk of maintaining the current interest rate policy without triggering a recession due to the monetary tightening that has been producing results. Not surprisingly, the committee extended the possibility of meeting the 3% fiscal target to the first quarter of 2028. And it left open the possibility of further interest rate reductions. However, it did not convince that new cuts will occur in the coming months – especially since there is an election in between.

Interest rates hovering around 14%, as the market anticipates, remain extremely high and contribute to making banks more selective in granting loans. This effect is particularly noticeable to Brazilians, who are prone to consumption and indebtedness.

The result? Consumer and business confidence is gradually eroding, aggravated by the tense global geopolitical scenario, despite the end of the US-Iran war . Oil, around US$78 after the announcement of the peace agreement, is at its lowest level since the beginning of the war. But global and local inflation remain under scrutiny. And on the eve of a super El Niño that will worsen weather conditions and is likely to affect food prices – the most noticeable increase for the population.

Between June 24 and 29, Ibre FGV will update five June confidence indicators – relating to consumers, construction, industry, commerce, and services. The data will contribute to refining projections on second-quarter GDP performance, with estimated expansion, for now, between 0.3% and 0.5%.

Most relevant will be the release of the Copom minutes on Tuesday, the 23rd, and the Monetary Policy Report on Thursday, the 25th. Gabriel Galípolo and Paulo Picchetti, respectively president and director of the Central Bank, will present the document, as is customary.