The financial market maintains high expectations for both inflation and the dollar exchange rate in 2025. In the case of inflation, this high expectation has been maintained for 12 weeks, culminating, now, with a projection that, at the end of the year , the Broad National Consumer Price Index (IPCA) – considered the country’s official inflation – is at 4.99%.
A week ago, the market expectation was that inflation would close 2025 at 4.96%; and four weeks ago it was expected to close at 4.59%. For subsequent years, the market works with inflationary expectations of 4.03% in 2026; and 3.90 in 2027. The numbers are in the Focus Bulletin, released this Monday (6) by the Central Bank (BC).
The estimate for 2025 is more pessimistic than official forecasts. The federal government estimates an IPCA of 3.1% this year, according to the 2025 Budget Guidelines Law (LDO) approved by the National Congress.
As the official inflation index for 2024 has not yet been released, the market continues to make projections for the year ended. In this case, expectations for the inflation index went in the opposite direction, reducing from the 4.90% projected a week ago to 4.89%, according to the bulletin released today. The ceiling for the inflation target set for 2024 is 4.50%.
Selic
To achieve the inflation target, the Central Bank uses as its main instrument the basic interest rate, the Selic, defined at 12.25% per year by the Monetary Policy Committee (Copom). The recent rise in the dollar and the uncertainties surrounding inflation and the global economy made the BC increase the pace of interest rate hikes at the last meeting of the year, on December 11th.
The expectation, therefore, is that the Selic will increase at the beginning of 2025. Given this scenario, the financial market increased the projection of this basic rate for the end of this year, going from the 14.75% projected a week ago, to the 15 % projected in this most recent bulletin. Four weeks ago, this projection was at 13.50%.
For subsequent years, the market works with a projection of 12% in 2026; and 10% in 2027.
Dollar and GDP
The market projects that, by the end of 2025, the dollar will be trading at R$6, maintaining the upward trend that has been observed for 10 weeks. Last week, the expected price for the end of this year was R$5.96; and four weeks ago it was expected that the exchange rate of the North American currency would close the year at R$5.77.
For 2026 and 2027, expectations remain stable, at R$5.90 and R$5.80, respectively.
Forecasts for the Gross Domestic Product (GDP – the sum of goods and services produced in the country) for 2025 increased from 2.01% to 2.02%. Four weeks ago, the market projected 2% growth for the 2025 GDP. For the 2026 and 2027 GDPs, the market projects growth of 1% and 2%, respectively.
