The financial market forecast for the Broad National Consumer Price Index (IPCA) – official reference for inflation in the country – went from 3.95% to 3.91% in 2026. The estimate is in the Focus bulletin this Monday (23), a survey published weekly, in Brasília, by the Central Bank (BC) with the expectations of financial institutions for the main economic indicators.
For 2027, the inflation projection remained at 3.8%. For 2028 and 2029, estimates are 3.5% for both years.
For the seventh week in a row, the forecast for 2026 inflation was reduced and remains within the target range for price changes 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%.
Light and gasoline
In January, the rise in electricity bill and gasoline prices caused official inflation of the month to close at 0.33%, the same level as December. According to the Brazilian Institute of Geography and Statistics (IBGE), the result led the IPCA to accumulate an increase of 4.44% in 2025.
Selic Rate
To achieve the inflation target, the Central Bank uses as its main instrument the basic interest rate (Selic Rate), currently defined at 15% per year by the BC’s Monetary Policy Committee (Copom).
Despite the decline in inflation and the dollarthe board did not change interest rates for the fifth time in a row at the last meeting, at the end of January.
The rate is at the highest level since July 2006, when it stood at 15.25% per year. In minutes, Copom confirmed that it will begin reducing interest rates at the March meeting, if inflation remains under control and there are no surprises in the economic scenario. Even so, interest rates will be maintained at restrictive levels.
Market analysts’ estimate for the basic rate was reduced in this edition of the Focus Bulletin – from 12.25% per year to 12.13% per year until the end of 2026. For 2027 and 2028, the forecast is that the Selic will be reduced again to 10.5% per year and 10% per year, respectively. In 2029, the rate should reach 9.5% per year.
Fees
When Copom increases the Selic, the purpose is to contain heated demand; This has an impact on prices because higher interest rates make credit more expensive and encourage savings. Therefore, higher rates can also make it difficult for the economy to expand.
Banks also consider other factors when defining the interest charged to consumers, such as risk of default, profit and administrative expenses.
When the Selic Rate is reduced, credit tends to become cheaper, encouraging production and consumption, reducing control over inflation and stimulating economic activity.
GDP and exchange rate
In this edition of the Central Bank bulletin, financial institutions’ estimate for the growth of the Brazilian economy this year increased from 1.8% to 1.82%. For 2027, the projection for the Gross Domestic Product (GDP, the sum of goods and services produced in the country) was 1.8%. For 2028 and 2029, the financial market estimates GDP expansion at 2% for both years.
Driven by the expansion of industry and agriculturein the third quarter of 2025 the Brazilian economy grew 0.1%which is considered by IBGE as stability. The release of the 2025 consolidated GDP is scheduled for March 3.
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 it reached 4.8%.
The forecast for the dollar exchange rate is R$5.45 for the end of this year. At the end of 2027, it is estimated that the North American currency will be R$5.50.
