(Picture: Marcelo Casal Jr)
Brazil’s economy: inflation retreats and selic kept at 15% to guarantee target
Focus Bulletin records fifth consecutive drop in IPCA projections. While prices cool down, Central Bank keeps Selic rate at 15% and GDP projects moderate growth.
The Brazilian financial market is breathing an air of cautious optimism. For the fifth consecutive week, analysts have lowered the forecast for the Broad National Consumer Price Index (IPCA), the country’s official inflation gauge. According to the latest Focus Bulletin released by the Central Bank (BC), the estimate for the end of 2025 has been adjusted from 4.4% to 4.36%, signaling a more robust economic stabilization trajectory than previously anticipated.
Inflation under control and within target
The new projection comes as a relief for monetary policy, as it positions 2025 inflation comfortably within the target range defined by the National Monetary Council (CMN). The central target is 3%, with a tolerance margin of 1.5 percentage points (ranging between 1.5% and 4.5%).
The long-term horizon also points to a decompression in prices. Expectations for 2026 retreated to 4.1%, followed by projections of 3.8% for 2027 and 3.5% for 2028. Recent data reinforce this trend: in November, monthly inflation was 0.18%—a slight increase from October (0.09%), driven strictly by airfares, but keeping the 12-month accumulated rate at 4.46%, within safety parameters.
Selic at 15%: the necessary bitter pill
Despite the improvement in price indices, the Monetary Policy Committee (Copom) maintains a vigilant stance. The benchmark interest rate, the Selic, remains fixed at 15% per year for the fourth consecutive time—the highest level since July 2006.
The Central Bank justifies maintaining high interest rates as a precautionary measure in the face of global economic and fiscal uncertainties. The strategy aims to make credit more expensive and encourage savings to contain demand and anchor inflation. However, the futures market is already pricing in relief: analysts project a gradual reduction of the Selic to 12.13% by the end of 2026, reaching single digits (9.5%) only in 2028.
GDP and exchange rate: resilient growth
On the economic activity front, projections for the Gross Domestic Product (GDP) for 2025 remained stable at 2.25%. Brazil, coming from a sequence of four years of expansion—closing the previous year with a 3.4% rise driven by services and industry—is expected to see more moderate growth in the coming cycles: 1.8% for 2026 and a slight recovery to 2% in 2028.
Regarding the foreign exchange market, the expectation is for relative stability. The projection for the dollar is R$ 5.40 at the end of this year, with a slight appreciation of the US currency to R$ 5.50 at the close of 2026. The dataset suggests that, although the cost of money remains high, Brazil is moving toward sustainable macroeconomic balance.
Resumo em Português:
O mercado financeiro brasileiro revisou para baixo a previsão da inflação (IPCA) de 2025, fixando-a em 4,36%, dentro da meta oficial. O Boletim Focus destaca um cenário de otimismo cauteloso: enquanto os preços dão sinais de arrefecimento, o Banco Central mantém a taxa Selic em um patamar elevado de 15% para garantir a estabilidade. O PIB projeta um crescimento de 2,25% para o ano, com o dólar estimado em R$ 5,40.
Resumen en Español:
El mercado financiero brasileño revisó a la baja la previsión de inflación (IPCA) para 2025, fijándola en 4,36%, dentro de la meta oficial. El Boletín Focus destaca un escenario de optimismo cauteloso: mientras los precios muestran señales de enfriamiento, el Banco Central mantiene la tasa Selic en un nivel elevado del 15% para garantizar la estabilidad. El PIB proyecta un crecimiento del 2,25% para el año, con el dólar estimado en 5,40 reales.
