Brazil's Inflation Forecast Slightly Lowered for 2026 with Stable Economic Growth Projections

Brazil's financial market has revised the inflation forecast for 2026 downwards, with the National Consumer Price Index (IPCA) now expected at 3.95%, down from 3.97%, according to the Central Bank's Focus bulletin released on February 18. This represents the sixth consecutive weekly reduction and places inflation comfortably within the Central Bank's target range of 3%, allowing a 1.5 percentage points tolerance. Inflation projections for 2027 remain steady at 3.8%, while for 2028 and 2029, both are forecast at 3.5%.

The basic interest rate, the Selic, remains at 15% per year — the highest level since July 2006 — unchanged for five consecutive policy meetings. The Monetary Policy Committee (Copom) has signaled a potential rate cut starting in March if inflation remains under control. Analysts anticipate the Selic could decline to 12.25% by the end of 2026, followed by 10.5% in 2027 and 10% in 2028, reaching 9.5% in 2029.

Economic growth estimates hold steady, with the Gross Domestic Product (GDP) projected to expand by 1.8% in both 2026 and 2027, and increase to 2% in 2028 and 2029. The economy showed signs of stability with a 0.1% GDP growth in the third quarter of 2025, while overall GDP grew by 3.4% in 2024 — the strongest growth since 2021. The exchange rate for the US dollar against the Brazilian real is expected to stabilize at around R$5.50 through 2027.

These forecasts suggest a cautiously optimistic outlook for Brazil’s inflation and economic expansion in the coming years, with monetary policy adjustments anticipated to support these trends.