Financial market reduces Selic projection for 2026

The financial market reduced the expectation for the Selic basic interest rate at the end of 2026 from 13.75% to 13.50%. The projection, presented by the Focus Bulletin released this Monday (21) by the Central Bank, indicates that the market is working with the expectation of a new interest rate cut this year.

The downward revision occurs five days after the Monetary Policy Committee (Copom) reduced the Selic by 0.25 percentage points, which is now at 13.75%. The Selic rate is the Central Bank's main instrument for achieving the inflation target.

The scenario, therefore, reinforces the assessment that the current interest cycle will be more flexible in the coming months, as inflation remains relatively controlled.

For 2027, the estimate for Selic remains at 12% per year. The projections for 2028 and 2029 remained stable at 10.50% and 10%, respectively.

In relation to the country's official inflation, measured by the Broad National Consumer Price Index (IPCA), the market slightly raised the forecast for this year, from 4.90% to 4.92%. For 2027, the expectation was maintained at 4.30%; and for 2028, by 3.80%.

Selic x inflation

The basic interest rate is the main instrument used by the Central Bank to control inflation. When the Selic rate is high, credit tends to become more expensive, which reduces consumption and helps to contain rising prices, in addition to encouraging savings.

Reducing interest rates seeks to stimulate economic activity, by facilitating access to credit and encouraging investment and consumption.

It is worth remembering that banks also consider other factors when defining the interest charged to consumers. These include the risk of default, profit and administrative expenses.

Economy

The estimate for the growth of the Brazilian economy was revised downwards again. The projection for the expansion of the Gross Domestic Product (GDP) in 2026 fell from 1.89% to 1.88%. For 2027, the forecast dropped from 1.45% to 1.43%. Estimates for 2028 were maintained at 1.87%.