Brazil market sees higher Selic, inflation for 2026

The latest Focus Market Readout from the Banco Central do Brasil indicates a consensus among analysts for higher inflation and interest rates in 2026.

The median projection for the IPCA (consumer price index) for 2026 increased to 4.92 percent, up from 4.91 percent a week ago and 4.80 percent four weeks ago.

Similarly, the Selic target rate for 2026 saw an upward revision to 13.25 percent per annum, compared to 13.00 percent in the previous two readouts.

This marks a notable shift in expectations.

In contrast, the projection for Brazil's Gross Domestic Product (GDP) growth for 2026 remained stable at 1.85 percent.

The exchange rate forecast for 2026 showed a slight decrease, settling at R$5.20 per US dollar, down from R$5.30 four weeks prior.

Beyond the immediate monetary policy indicators, other key economic forecasts showed mixed trends.

The Net Public Sector Debt as a percentage of GDP for 2026 remained stable at 69.90 percent, with both the Primary and Nominal Results holding steady at -0.50 percent and -8.50 percent of GDP respectively.

On the external front, the Trade Balance for 2026 saw an upward revision to US$75.53 billion, an increase from US$75.00 billion a week ago.

Concurrently, the Current Account deficit for 2026 is projected to narrow slightly to US$-59.70 billion, an improvement from previous forecasts.

Foreign Direct Investment (FDI) projections for 2026 remained unchanged at US$75.00 billion.