The Brazilian financial market’s estimate for the Broad National Consumer Price Index (IPCA) – considered the country’s official inflation – increased from 4.70% to 4.56% in 2025.
The forecast was published in Focus newsletter this Monday (27), a survey released weekly by the Central Bank (BC), with the projection of financial institutions for the country’s main economic indicators.
For 2026, the inflation projection also fell, from 4.27% to 4.20%. For 2027 and 2028, forecasts are 3.82% and 3.54%, respectively.
Inflation target
The inflation estimate for 2025 is above the ceiling of the target that should be pursued by the BC. The target set by the National Monetary Council (CMN) this year is 3%, with a tolerance range of 1.5 percentage points up or down. In other words, the lower limit is 1.5% and the upper limit is 4.5%.
After fall in Augustin September official inflation rose 0.48%, influenced by the rise in electricity bills. According to the Brazilian Institute of Geography and Statistics (IBGE), in 12 months, the Broad National Consumer Price Index (IPCA) accumulated an increase of 5.17%. September’s data is the highest since March (0.56%).
Basic interest
To achieve the inflation target, the Central Bank uses the basic interest rate – the Selic – as its main instrument. At the last meeting of the BC Monetary Policy Committee (Copom), on September 17, the board maintained the Selic rate at 15% per year.
The uncertainties of the external economic scenario and indicators that show moderation in internal growth are among the factors that led to the maintenance of the Selic, at the last meeting, last month.
The latest minutes of the Central Bank body states that the intention of the Copom is to maintain the current interest rate (15%) “for a very prolonged period” to ensure that the inflation target is achieved.
Analysts’ estimate of the base rate that will end in 2025 remained at 15% per year. By the end of 2026, the expectation is that the Selic will fall to 12.25% per year. For 2027 and 2028, the forecast is that it will be reduced again to 10.5% per year and 10% per year, respectively.
When Copom increases the basic interest rate, the purpose is to contain heated demand, and this has an impact on prices because higher interest rates make credit more expensive and encourage savings. But, in addition to the Selic, banks consider other factors when defining the interest charged to consumers, such as risk of default, profit and administrative expenses.
Therefore, higher rates can also make it difficult for the economy to expand. When the Selic rate is reduced, credit tends to become cheaper, encouraging production and consumption, reducing control over inflation and stimulating economic activity.
GDP
In this Monday’s edition of the Focus bulletin, the financial institutions’ estimate for the Gross Domestic Product (GDP) – the sum of goods and services produced in the country – growth of the Brazilian economy this year fell from 2.17% to 2.16%.
For 2026, the projection for growth in Brazilian economic activity is 1.78%. For 2027 and 2028, the financial market is more optimistic and calculates GDP expansion to 1.83% and 2%, respectively.
Driven by the expansion of services and industry, in second quarter of this year the Brazilian economy grew 0.4%. In 2024, GDP closed with an increase of 3.4%.
The result represents the fourth consecutive year of growth, being the biggest expansion since 2021, when GDP reached 4.8%.
Exchange
The dollar exchange rate forecast is R$5.41 for the end of this year. At the end of 2026, the estimate for the North American currency remained at R$5.50.
