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2026-07-13 19:28:10
[Brazilian Central Bank Survey Shows 2026 Inflation Expectation Revised Down to 5.16%, GDP Growth Forecast Remains Stable at 1.99%] ⑴ The latest survey of economists by the Central Bank of Brazil shows that the annual IPCA inflation index forecast for 2026 has been revised down to 5.16% from the previous 5.30%, while the inflation forecast for 2027 has been slightly revised up to 4.20%, from the previous 4.18%. ⑵ Regarding interest rate expectations, economists maintained their forecast for the benchmark interest rate Selic at 14.00% at the end of 2026 and at 12.00% at the end of 2027, reflecting stable market expectations for the end of the Brazilian Central Bank's tightening cycle and the pace of subsequent interest rate cuts. ⑶ Regarding economic growth forecasts, the GDP growth forecast for 2026 remains unchanged at 1.99%, while the growth forecast for 2027 has been slightly revised down from the previous 1.69% to 1.65%, indicating a slight cooling of the medium-term growth outlook. (4) Regarding exchange rate expectations, economists maintain their forecast of a USD/BRL exchange rate of 5.20 at the end of 2026 and 5.28 at the end of 2027, indicating no further deterioration in the expectation of a real depreciation. (5) The combination of a downward revision of inflation and unchanged interest rate expectations is slightly positive for the bond market, but the downward revision of growth forecasts for 2027 and a stable exchange rate reflect the market's cautious attitude towards Brazil's structural improvements. Going forward, attention should be paid to the continued impact of the credibility of the fiscal framework and changes in the external liquidity environment on asset pricing.
