The latest Focus Bulletin from the Central Bank of Brazil reveals a deepening sense of caution among market analysts, as expectations for the country’s economic landscape in 2026 continue to drift away from previous targets. The weekly survey of financial institutions shows a notable deterioration in the medium-term outlook, characterized by rising inflation forecasts and a corresponding upward revision of the benchmark Selic interest rate.
Economists have raised their 2026 Selic projection to 13.00% per year, marking a new peak in expectations for that period. This hawkish recalibration extends into 2027, with estimates climbing to 11.00%. While the forecast for 2028 remains anchored at 10.00% for the thirteenth consecutive week, the slight uptick in the 2029 projection—now at 9.88%—suggests that the market anticipates a prolonged period of restrictive monetary policy to combat persistent price pressures.
The driver behind these interest rate hikes is a stubborn inflationary trend. Projections for the IPCA, Brazil’s consumer price index, rose for the sixth week in a row for the 2026 horizon, reaching 4.80%. Wholesale inflation, measured by the IGP-M, saw an even more aggressive revision, jumping to 4.66% for 2026 from 3.86% just a week prior. While GDP growth remains relatively stable, the widening gap between current inflation targets and market expectations underscores the challenges facing the Central Bank as it navigates a complex fiscal and monetary environment.
With reporting from InfoMoney.
Source · InfoMoney
