Brazil market outlook: Inflation expectations decline for 2026

Market participants surveyed by the Banco Central do Brasil (BCB) have adjusted their inflation forecasts for 2026 downwards.

The median expectation for the Broad Consumer Price Index (IPCA) for 2026 now stands at 5.30 percent, a marginal reduction from 5.33 percent reported a week prior.

This marks the first weekly decline in IPCA projections for the year after a period of increases.

Similarly, the General Market Price Index (IGP-M) for 2026 saw a more significant downward revision, falling to 5.68 percent from 6.15 percent.

Despite these shifts in inflation outlook, the median Selic target rate, Brazil's benchmark interest rate, remained stable at 14.00 percent for 2026 and 12.00 percent for 2027, reflecting a consistent policy stance.

Expectations for Brazil's Gross Domestic Product (GDP) growth remained unchanged, holding steady at 1.99 percent for 2026.

The exchange rate forecast for the end of 2026 also showed stability, with the median projection at R$5.20 per US dollar.

However, the outlook for Net Public Sector Debt as a percentage of GDP for 2026 saw a slight upward adjustment, moving to 69.84 percent from 69.82 percent a week ago.

The Current Account deficit for 2026 is now projected at US$60.00 billion, a minor improvement from the previous week's -US$60.25 billion, while Foreign Direct Investment expectations for 2026 increased to US$76.00 billion.