Brazil market sees stable Selic, slight inflation dip for 2026

The latest Focus Market Readout from the Banco Central do Brasil indicates a stable outlook for the benchmark Selic target rate, which market participants project to remain at 14.00 percent per annum for 2026.

This forecast has held steady for the past four weeks.

For 2027, the Selic target is expected to be 12.00 percent, also showing no change from previous weeks.

The median forecast for the Broad National Consumer Price Index (IPCA) for 2026 saw a marginal decrease to 5.15 percent, down from 5.16 percent a week prior, continuing a downward trend observed over three weeks.

However, the IPCA forecast for 2027 remained stable at 4.20 percent.

Expectations for Brazil's Gross Domestic Product (GDP) growth for 2026 were unchanged at 1.99 percent, reflecting a consistent view among respondents.

Foreign Direct Investment (FDI) for 2026 showed an upward revision, with the median forecast increasing to US$77.20 billion from US$76.00 billion.

Looking further ahead, the IPCA forecast for 2028 saw a slight increase to 3.78 percent from 3.70 percent, marking a shift after a period of stability.

The General Market Price Index (IGP-M) for 2027 also edged up to 4.12 percent.

The exchange rate for 2028 remained stable at R$5.28 per US dollar, with a minor downward adjustment for 2029 to R$5.30. On the fiscal front, the Net Public Sector Debt for 2026 is projected to decrease marginally to 69.82 percent of GDP.

However, the 2029 forecast shows a slight increase to 79.05 percent.

The Primary Result for 2029 also indicates a minor increase in the expected deficit to -0.16 percent of GDP, suggesting ongoing fiscal challenges.