The financial market forecast for the Broad National Consumer Price Index (IPCA), the official reference for inflation in the country, went from 5.01% to 5% this year. The estimate is in the Focus Bulletin this Tuesday (8), a survey released weekly by the Central Bank (BC) with the expectations of financial institutions for the main economic indicators.
The forecast is above the target range that should be pursued by the BC. Established by the National Monetary Council (CMN), the target is 3%, with a tolerance interval of 1.5 percentage points. In other words, the lower limit is 1.5% and the upper limit is 4.5%.
In July, food became cheaper and contributed to official inflation losing strength for the fourth month in a row and closing at 0.07%, according to the Brazilian Institute of Geography and Statistics (IBGE). The result caused the IPCA to accumulate 4.44% in 12 months, bringing the indicator back to the government's target.
August inflation will be released next Friday (11) by IBGE.
For 2027, the inflation projection varied from 4.28% to 4.29%. For 2028 and 2029, estimates are 3.8% and 3.5%, respectively.
Selic Rate
To achieve the inflation target, the Central Bank uses as its main instrument the basic interest rate, the Selic, currently set at 14% per year by the BC's Monetary Policy Committee (Copom). At the last meeting, in August, the board reduced the Selic by 0.25 percentage points, for the fourth time in a row.
From June 2025 to March this year, the Selic remained at 15% per year, the highest level in almost 20 years. The Copom cut interest rates again at the March meeting, in a scenario of falling inflation. However, the war in the Middle East, which was reflected in rising fuel and food prices, makes it difficult for the rate to fall.
The next Copom meeting to define the Selic will be on September 15th and 16th.
In this edition of Focus, market analysts estimate that the basic rate will reach 13.75% per year by the end of 2026. For 2027 and 2028, the forecast is that the Selic will be reduced to 12% per year and 10.5% per year, respectively. In 2029, the rate should remain at 10% per year.
When Copom increases the Selic, the purpose is to contain heated demand, which has an impact on prices, because higher interest rates make credit more expensive and encourage savings. Therefore, higher rates can also make it difficult for the economy to expand.
Banks also consider other factors when defining the interest charged to consumers, such as risk of default, profit and administrative expenses.
When the Selic Rate is reduced, the tendency is for credit to become cheaper, encouraging production and consumption, reducing control over inflation and stimulating economic activity.
GDP and exchange rate
In this edition of the Central Bank bulletin, financial institutions' estimate for the growth of the Brazilian economy this year went from 1.92% to 1.93%. For 2027, the projection for the Gross Domestic Product (GDP, the sum of goods and services produced in the country) remains at 1.5%. For 2028 and 2029, the financial market estimates GDP expansion at 1.96% and 2%, respectively.
In the second quarter of 2026, the country's economy grew 0.5% compared to the first quarter. In the last 12 months, there was an expansion of 1.9%, according to IBGE.
In 2025, the Brazilian economy grew 2.3%, with expansion in all sectors, with emphasis on agriculture. The result represents the fifth consecutive year of growth.
In this week's Focus, the dollar exchange rate forecast is R$5.20 for the end of this year. At the end of 2027, it is estimated that the North American currency will be R$5.30.
