Brazilian private-sector economists are marking up their inflation and interest-rate forecasts in the first central bank weekly survey since President Luiz Inacio Lula da Silva's reelection on October 25. The updated projections also point to weaker economic growth and a softer real through 2027 as markets absorb the political shift ahead of the central bank's next rate decision.
Highlights
- Economists raise Brazil 2027 inflation forecast to 4.76% from 4.34% and see 2027 benchmark rate at 12.50%, above prior 11.75%.
- Growth projections for GDP slip to 1.76% in 2026 and 1.2% in 2027, down from 1.8% and 1.31% in last week's survey.
- Brazilian real forecast weakens to 5.34 per dollar in 2026 and 5.40 in 2027, versus previous estimates of 5.05 and 5.15.
Central bank survey signals higher prices and borrowing costs
As reported by Reuters, the latest weekly central bank poll shows economists now expect inflation to reach 4.76% at the end of 2027, up from 4.34% in the previous survey. Forecasts for the benchmark interest rate also move higher, to 13.50% for end-2026 from 13.25%, and to 12.50% for end-2027 from 11.75%.Growth expectations weaken at the same time. GDP forecasts for 2026 and 2027 fall to 1.76% and 1.2%, respectively, from 1.8% and 1.31% in the prior poll.
The Brazilian real is also seen ending 2026 and 2027 at weaker levels against the U.S. dollar, with forecasts shifting to 5.34 and 5.40 per dollar, from 5.05 and 5.15 previously.
Market pressure builds before next rate decision
Lula's victory over right-wing Senator Flavio Bolsonaro, whom investors view as the more market-friendly candidate, triggers a sharp selloff in Brazilian assets last week. The revised survey underscores concerns that the political outcome could complicate the path for inflation and monetary easing.Brazil's central bank targets inflation at 3%, with a tolerance band of 1.5 percentage points on either side. Its board is set to announce the next interest-rate decision on Wednesday, after five straight 25-basis-point cuts that bring the Selic rate to 13.75%.
Our earlier article on the Ibovespa’s selloff after Lula da Silva’s re-election described how fiscal-policy uncertainty triggered heavy, broad-based losses and kept the index under strong technical pressure. We noted that prices were trading well below key moving averages, with momentum indicators pointing to elevated downside risk and the potential for further declines amid persistent volatility.
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