Brazil's financial market projects inflation rate of 5.51% this year
The financial market's forecast for the Broad National Consumer Price Index (IPCA), the country's official inflation measure, has increased from 5.5 percent to 5.51 percent for this year. This estimate was included in the weekly bulletin released by Brazil’s Central Bank on Monday (Feb. 3). Four weeks ago, inflation was projected to end the year at 4.99 percent.
The inflation projection for 2026 has also increased, rising from 4.22 percent to 4.28 percent. For 2027 and 2028, the forecasts stand at 3.9 percent and 3.74 percent, respectively.
The estimate for this year exceeds the Central Bank's inflation target ceiling, set by the National Monetary Council (CMN) at 3 percent, with a tolerance range of ±1.5 percentage points. This means the lower limit is 1.5 percent, and the upper limit is 4.5 percent.
The financial market's forecast for Gross Domestic Product (GDP) growth this year remains at 2.06 percent, unchanged from last week. Four weeks ago, the projection was for economic growth to reach 2.02 percent by year-end.
The bulletin projects GDP growth of 1.72 percent for 2026. For 2027 and 2028, the economy is expected to expand by 1.96 percent and 2 percent, respectively.
Interest rates
Regarding the basic interest rate, the Selic, the projection from four weeks ago remains unchanged: 15 percent for this year, 12.5 percent for 2026, 10.38 percent for 2027, and 10 percent for 2028.
To achieve the inflation target, the Central Bank's primary tool is the Selic rate, which was raised to 13.25 percent per year by the Monetary Policy Committee (Copom) last week.
This marks the fourth consecutive increase in the Selic, which is now at its highest level since September 2023, when it was also set at 13.25 percent per year. The Monetary Council raised the Selic rate by 1 percentage point, citing uncertainties around inflation, the global economy, the recent rise in the dollar, and public spending. The move was criticized by the Minister of Labor and Employment, Luiz Marinho, who argued that higher interest rates make credit more expensive, discourage production and consumption, and hinder economic growth.
