Ibovespa Could Hit 190,000 Points in 2025 Amid Elections and Selic Rate Cuts, JP Morgan Predicts

• Why Is the Ibovespa Breaking Records?
• How Low Will Brazil’s Interest Rates Go?
• Elections: The Make-or-Break Factor for Investors
• Who’s Running—and Why It Matters
• What’s Next for the Brazilian Market?
• FAQs

The Ibovespa (IBOV) has been smashing records lately, and JP Morgan analysts believe it could surge to 190,000 points by the end of 2025—driven by Brazil’s upcoming elections and aggressive interest rate cuts. With the Selic rate expected to drop sharply and political volatility looming, investors are bracing for a rollercoaster year. Here’s why the Brazilian stock market might be the wildcard of emerging markets in 2025.

Why Is the Ibovespa Breaking Records?

The Ibovespa, Brazil’s benchmark stock index, has been on a tear, hitting an all-time high of 164,000 points recently. Year-to-date, it’s up over 36%, fueled by a risk-on rally as investors bet on looser monetary policy and a post-election economic reset. JP Morgan’s base-case scenario sees the index climbing to 190,000—a potential 18% jump from current levels. But what’s really driving this optimism? Two words:and.

How Low Will Brazil’s Interest Rates Go?

JP Morgan expects the Central Bank of Brazil (BCB) to start slashing the Selic rate in March 2025, with a 50-basis-point cut—though an earlier MOVE in January isn’t off the table. By year-end, analysts project a total reduction of 3.50–4.00 percentage points, bringing the Selic down to 11.00%. That’s slightly more dovish than the market’s consensus of 12.00%, as per the latest BCB Focus Survey. “Brazil will likely deliver the world’s most aggressive monetary easing in 2025,” says the bank’s emerging markets team. But there’s a catch: this is the first time the BCB will cut rates during an election cycle, a period notorious for market turbulence.

Elections: The Make-or-Break Factor for Investors

JP Morgan calls the 2026 presidential race the “key trigger” for Brazilian assets. The bank warns that low rates won’t last if fiscal policy doesn’t pivot after 2027. “The election outcome matters,” their report stresses. Brazil’s current mix of tight monetary policy and loose fiscal spending has pushed real interest rates above 10% and the budget deficit to 9.1% of GDP—the worst among emerging markets. Add a 20% spending hike under Lula’s third term, and debt-to-GDP has ballooned to nearly 80%. “This combo is choking growth, starving investment, and making the market hyper-cyclical,” says JP Morgan. “The October election could realign macroeconomic policy—or deepen the chaos.”

Who’s Running—and Why It Matters

The left’s likely candidate, President Lula da Silva (PT), has rebounded in polls after a tariff spat with the U.S. boosted his nationalist appeal. Meanwhile, the opposition is fragmented, with São Paulo Governor Tarcísio de Freitas (Republicans) emerging as the right’s frontrunner—though he hasn’t officially declared. Wildcard: ex-President Jair Bolsonaro, despite a 27-year prison sentence, could still sway the race by endorsing his wife or a family member. “Markets hate uncertainty, and this election is packed with it,” notes the BTCC research team.

What’s Next for the Brazilian Market?

Brazilian stocks remain cheap versus historical averages, with 7 of 10 sectors trading below emerging-market peers. But earnings face headwinds as GDP growth slows from ~2% to ~1% in 2026. JP Morgan expects the Ibovespa to peak in Q1–Q2 2025, riding the dual tailwinds of U.S. and Brazilian rate cuts. Post-election, the bank sees limited upside—unless power changes hands, which could catapult the index to 230,000 in a best-case scenario. One thing’s clear: buckle up for volatility.

FAQs

How high could the Ibovespa go in 2025?

JP Morgan’s base case is 190,000 points (up 18%), with a bull-case target of 230,000 if the election triggers a pro-market shift.

When will Brazil start cutting interest rates?

The central bank is expected to begin in March 2025, with a total reduction of 3.50–4.00 percentage points by year-end.

Why are elections so crucial for the Ibovespa?

Brazil’s fiscal trajectory hinges on the outcome. A reform-friendly winner could stabilize debt; status quo policies may spook investors.