Economists raise Brazil’s 2026 inflation forecast and lower rate outlook

Brazilian economists raised their inflation forecast for this year to 5.22%, from 5.01%, in the latest Focus survey.

The increase followed a 0.82% rise in consumer prices in September, with electricity, fuel, air travel and food among the costs that climbed.

They lowered their forecast for the Selic rate to 13.25% by year-end, from 13.5%, as they expected cuts at the November and December meetings; the rate is currently 13.75%.

Their forecasts for 2027 stayed unchanged at 4.3% inflation, a 12% Selic rate and 1.4% economic growth.

The survey was the first to include responses after Flávio Bolsonaro led the presidential election’s first round, ahead of President Luiz Inácio Lula da Silva; market optimism had sent Brazil’s stock market to a record and the dollar below R$5.

Some investors associate a Bolsonaro victory with tighter control of public spending, but analysts did not change their 2027 forecasts.

The survey also showed small adjustments to some 2028 and 2029 forecasts, but it gave no new details about future policy decisions.