FILE PHOTO: A drone view shows the central bank's headquarters in Brasilia, Brazil, December 26, 2024. REUTERS/Ueslei Marcelino/File Photo

By Gabriel Burin

BUENOS AIRES (Reuters) - Brazil's central bank is set to keep its key rate unchanged at 15% in a meeting on September 17 amid persistently high inflation pressures, a Reuters poll showed.

It would be the second consecutive time the bank stands pat after its last decision in July when policymakers halted a tightening cycle that added 450 basis points in rate hikes since September 2024.

They are expected to maintain a cautious strategy that confounded some analysts who until recently had anticipated Banco Central do Brasil (BCB) to have turned more dovish by now.

The bank's monetary policy committee, known as Copom, will keep the Selic rate at 15% on September 17, according to all 41 economists polled September 8-12.

"Although the central bank has made progress in bringing inflation closer to target, it still faces a tight labor market, along with an uncertain international environment," said Jose Alfaix, economist at Rio Bravo Investimentos.

"The appreciation of the exchange rate has been helpful, but there is no certainty it will remain at its current level," he added.

In August, Brazil's consumer prices fell 0.11% from July, the first monthly deflation in a year, but rose 5.13% on annual terms, still running above the central bank's target of 3% with a tolerance band of 1.5 percentage points.

Service prices increased 0.39% on the month in August in another sign of inflation pressures related to record low unemployment that analysts say warrant a continuation of Copom's holding pattern for a "prolonged period".

Meanwhile, inflation expectations compiled in a weekly central bank poll continue above the middle goal of 3% despite recent improvement due in part to this year's strengthening of Brazil's real currency.

Last month, central bank chief Gabriel Galipolo reiterated the need to keep the cost of borrowing at a restrictive level, citing a slow convergence of inflation expectations toward the official target.

"Inflation expectations remain unanchored, while the underlying services core trend remains high, with a very gradual cooling," said Julio Cesar de Mello Barros, an economist at Banco Daycoval.

"Given this scenario, the central bank should reinforce its message of caution and the need for a restrictive monetary policy for an extended period."

Additionally, Copom is expected to highlight increased uncertainty from U.S. tariffs on Brazil that also was a factor behind the shift to a more cautious policy stance.

In the poll, of 36 respondents who answered a question on when the Selic would be adjusted after next week's decision, 10 saw a cut in December, 13 in January, nine in March, and the rest in other months.

Copom does not meet in February.

Asked about the size of the next move, 23 of 36 leaned towards a 25 basis points reduction, 12 viewed a 50 basis points move, and one a 100 basis points cut.

Median quarterly estimates showed the Selic staying at 15% until the end of 2025 and then falling a total 75 basis points to 14.25% at the end of the first quarter of 2026.

(Other stories from the Reuters global economic poll)

(Reporting and polling by Gabriel Burin in Buenos Aires; Editing by Louise Heavens)