The year 2025 is fast approaching, and the third week of December has a congested agenda with a barrage of national and international data, interspersed with decisions in Congress that seal the final push for deputies and senators before the recess, scheduled to begin on December 23 and return on February 2. The most important economic decision is the approval of the 2026 Budget , which, if delayed, will compulsorily restrict government spending.

Economic indicators dominate the start of the week, from China to Europe, including the US and Brazil. Information on the US labor market for November, delayed by the shutdown – crucial for interest rate projections after the Federal Reserve cut its rate to 3.50%/3.75% on the last "Super Wednesday" – will be released on Tuesday, December 16th.

On Thursday, the 18th, the central banks of the Eurozone, England, and Japan will set their benchmark interest rates, which should reaffirm Brazil's advantage in investor returns. The Brazilian real interest rate is around 9.5% and is expected to climb even higher with declining inflation and a stable Selic rate .

The Bank of England may cut its interest rate, which has been at 4%. The European Central Bank, which cut its rate by 2 percentage points in the year to June, is expected to keep it unchanged at 2%. The Bank of Japan may raise its interest rate, which has been fixed at 0.50% since January.

Here in Brazil, also at the beginning of the week, the Central Bank's Economic Activity Index (IBC-BR) and the GDP Monitor from the Brazilian Institute of Economics of the FGV (Getúlio Vargas Foundation) include October in their statistics. And the National Confederation of Industry (CNI) is expected to reinforce, with November data, the indication of fragility in the sector, which contrasts with the still resilient overall activity, as highlighted in the Copom (Monetary Policy Committee) minutes that maintained the Selic (benchmark interest rate) at 15%, a boost to its credibility with the market and a cause for concern for the government.

In its strongly worded statement following the Copom meeting, the Central Bank gave no clues about an interest rate cut. The minutes will be released on Tuesday, the 16th, and are not expected to provide spoilers for institutions still divided, in the post-Copom period, regarding a Selic rate cut in January or March. The minutes should reiterate, however, that monetary policy is having an effect on activity, inflation, and expectations, albeit slowly. The IPCA at 3% in the second quarter of 2027 should be on the committee's radar, but justifies maintaining Gabriel Galípolo's conservative discourse until the end of January, when Copom begins its 2026 forecast.

With a tighter calendar due to Christmas and New Year's, the release of sectoral reports from the Central Bank, traditionally concentrated in the last week of each month, may even be brought forward. For now, however, documents on credit and fiscal policy remain scheduled for after Christmas. The balance of external operations in November will be released on Friday the 19th. We'll see if Brazil's stratospheric interest rates are (really) attracting an avalanche of portfolio investors.

"Golden key" for Lula

Following the publication of the Minutes, the Central Bank will release the Monetary Policy Report on Thursday the 18th. Rich in analyses and projections, the document will be detailed by Galípolo and the Director of Economic Policy, Diogo Guillen, who will leave the institution on December 31st along with the Director of Financial System Organization and Resolution, Renato Gomes. Therefore, two vacancies in the leadership of the Central Bank will open up.

Everything indicates that the succession process will take place during the first quarter, since, in addition to the nominations of replacements by President Lula, the names must be approved by the Economic Affairs Committee and the Senate Plenary, which will resume their activities in February.

In Congress, the expectation of a vote on the Annual Budget Law (LOA) bill is dominating the week. Its approval, crucial for the government, is expected on Wednesday the 17th. However, it still depends on parliamentary approval for a 10% cut in tax benefits – equivalent to R$ 19.76 billion – granted to companies and sectors. No less relevant is the bill for tiered taxation of betting and fintech companies, which should be in transit between the Senate and the Chamber of Deputies in the coming days.

The delay in approving the Budget is not causing concern because it is considered more than likely, since the already approved draft of the Budget Guidelines Law (PLDO), which precedes the Budget, already included decisions of interest to the government and Congress.

Among these measures are the payment of 65% of parliamentary amendments by June due to the October elections; exceptions to the fiscal target for expenses, such as R$ 10 billion for the Post Office; and approval for meeting the fiscal target aiming for the lower limit of the tolerance range of 0.25% of GDP. In 2026, the target is a surplus of 0.25% or R$ 34.3 billion. Therefore, everything will be "right" if the government delivers balanced revenues and expenses.

Closing out the week, on Saturday the 20th, Lula will lead the Mercosur Summit in Foz do Iguaçu, which is expected to mark the transfer of the group's rotating presidency from Brazil to Paraguay, and the signing of the Mercosur-European Union (EU) agreement . The day before, according to the Secretariat of Social Communication of the Presidency of the Republic, the Ordinary Meeting of the Common Market Council will take place, with ministers of Foreign Affairs, Economy, and presidents of central banks from the region.

Still leading Mercosur , Lula is expected to sign the trade agreement with the Europeans, which involves 722 million inhabitants and a GDP of US$22 trillion. Concluded after two decades of negotiation, the treaty, however, depends on the approval of 27 EU member states. The vote in the European Parliament is scheduled to take place on Thursday the 18th.

It remains to be seen, therefore, whether Brazil's bet on formalizing the agreement holds true without incident, even though the Europeans approved safeguards on December 8 that could reduce exports of agricultural products to the EU and, consequently, the profits of Brazilian producers.