Brazil’s central bank projected annual inflation at 3.1% in Q2 2028, near its 3% target and the key horizon for its November rate decision, and at the same level through Q1 2029. It lowered its 2026 growth forecast to 1.8% from 2.0% and projected 1.4% for 2027.
The projections are likely to bolster market bets on another rate cut this year. Last week, the bank cut its benchmark Selic rate by 25 basis points to 13.75%, its fifth consecutive reduction, while leaving its next steps open.
The government projected GDP growth of 2.0% in 2026 and 2.3% in 2027. The central bank said its 2026 downgrade reflected weaker-than-expected early third-quarter indicators and a less favorable mix of second-quarter growth, which was concentrated in agriculture and extractive industries; household consumption and more cyclical sectors fell short. Its 2027 outlook assumes restrictive monetary policy, limited spare capacity, a highly uncertain external environment and fading fiscal and credit stimulus, with less contribution from agriculture and extractive industries.
