Brazil market forecasts higher Selic rate and inflation

Brazilian financial markets have revised their expectations upwards for both inflation and the benchmark Selic interest rate for 2026.

The median forecast for the IPCA consumer price index increased to 4.80 percent, up from 4.71 percent a week ago and 4.17 percent four weeks prior, marking its sixth consecutive week of upward revision.

Similarly, the Selic target rate for 2026 saw an upward adjustment, reaching 13.00 percent from 12.50 percent in the preceding weeks.

This marks the first increase in the Selic forecast in the current weekly trend.

Meanwhile, the median expectation for GDP growth in 2026 saw a slight upward revision to 1.86 percent from 1.85 percent.

The exchange rate forecast for 2026 showed a downward trend, settling at R$5.30 per US dollar, a decrease from R$5.37 a week ago.

Market expectations for 2027 also saw upward revisions, with IPCA inflation increasing to 3.99 percent and the Selic target rate rising to 11.00 percent.

In contrast, forecasts for 2028 largely remained stable, with IPCA at 3.60 percent and the Selic rate at 10.00 percent.

The 2029 outlook showed a minor uptick for the Selic rate to 9.88 percent, while IPCA held steady at 3.50 percent.

Beyond monetary policy, the current account deficit for 2026 is now projected to narrow to US$62.00 billion, an improvement from previous forecasts.

The trade balance surplus for 2026 is expected to increase to US$72.65 billion, reflecting a positive trend.