Financial market forecasts for the main economic indicators in 2025 – the expansion of the economy and the inflation index – remained stable in this Monday’s edition (10) of the Focus Bulletin. The survey of financial institutions is published weekly by the Central Bank (BC).
The estimate for the growth of the Brazilian economy this year remained at 2.16%. For 2026, the projection for the Gross Domestic Product (GDP, the sum of goods and services produced in the country) was 1.78%. For 2027 and 2028, the financial market estimates GDP expansion at 1.88% and 2%, respectively.
Driven by the expansion of services and industry, in the 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%.
The dollar exchange rate forecast is R$5.41 for the end of this year. At the end of 2026, it is estimated that the North American currency will be R$5.50.
Inflation
The financial market forecast for the Broad National Consumer Price Index (IPCA) – considered the country’s official inflation – was 4.55% this year. For 2026, the inflation projection also remained at 4.2%. For 2027 and 2028, forecasts are 3.8% and 3.5%, respectively.
The estimate for this year is still above the ceiling of the inflation target that should be pursued by the BC. Defined by the National Monetary Council (CMN), the target 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 a fall in August, In September, official inflation rose 0.48%influenced by the rise in electricity bills. In 12 months, the IPCA accumulated 5.17%, according to the Brazilian Institute of Geography and Statistics (IBGE).
Basic interest
To achieve the inflation target, the Central Bank uses as its main instrument the basic interest rate – the Selic – set at 15% per year by the BC’s Monetary Policy Committee (Copom). The decline in inflation and the slowdown in the economy led to Selic maintenance at the last meetinglast week, but the board does not rule out the possibility of raising interest rates again “if it deems it appropriate”.
In a note, the BC reported that the external environment remains uncertain due to the situation and economic policy in the United States, with repercussions on global financial conditions. In Brazil, the authority highlighted that inflation remains above the target, despite the slowdown in economic activity, which indicates that interest rates will remain high for a long time.
Analysts estimate that the base rate will end 2025 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.
