Financial market projections for inflation, GDP, Selic and dollar remain stable

All items projected in the Central Bank's (BC) Focus Bulletin, which reports financial market expectations for 2025, remained stable compared to the projections released last week. The document maintains its inflation projection for 2025 at 4.83% —a figure defined by the Broad Consumer Price Index (IPCA).

Four weeks ago, the country's official inflation was projected at 4.86%, a percentage that falls to 4.29% when projected for 2026, and to 3.90% for 2027.

In August, the country recorded negative inflation for the first time since August 2024 (deflation of -0.11%) , according to the Brazilian Institute of Geography and Statistics (IBGE). As a result, financial market projections are closer to the upper limit (4.5%).

In the case of the National Consumer Price Index (INPC), deflation was even greater, at -0.21%. Since August 2024, when the INPC was -0.14%, there has been no deflation in this index. The INPC calculates the country's average inflation.

GDP

The financial market's projection for Gross Domestic Product (GDP, the sum of all wealth produced in the country) is 2.16% – the same percentage estimated a week ago.

Four weeks ago, financial market expectations were that Brazilian GDP would close the year with 2.18% growth. Expectations for 2026 and 2027 also remained stable, at 1.80% and 1.90%, respectively, compared to last week.

Selic

To achieve the inflation target, the Central Bank uses the basic interest rate – the Selic – as its main instrument.

For the 13th consecutive week, the Focus bulletin maintains its projections for this index at 15% per year, the same percentage set by the Central Bank's Monetary Policy Committee (Copom) . For subsequent years (2026 and 2027), the index is projected at 12.25% and 10.50%, respectively.

The Monetary Policy Committee (Copom) justified maintaining the Selic rate at 15% due to the uncertainty of the external environment, "due to the economic situation and policy in the United States." According to the committee, the scenario requires caution "on the part of emerging countries in an environment marked by geopolitical tension."

The domestic outlook is also mentioned. According to Copom, economic activity indicators show moderate growth, despite the dynamism of the labor market. Inflation remains above target.

When Copom raises the base interest rate, the purpose is to curb heated demand, and this has an impact on prices because higher interest rates make credit more expensive and encourage savings.

Banks consider other factors besides the Selic rate when determining the interest rate to charge consumers. These include default risk, profits, and administrative expenses.

Thus, higher interest rates can also hinder economic expansion. When the Selic rate is reduced, credit tends to become cheaper, encouraging production and consumption, reducing inflation control and stimulating economic activity.

Dollar

Regarding the exchange rate, the financial market maintained its projection for the exchange rate at 5.50 reais at the end of 2025. Four weeks ago, Focus estimated that the US currency would close the year at 5.59 reais.

For 2026 and 2027, market expectations are that the dollar will close the year at the same rate: 5.60 reais.

Currently, the dollar is at 5.32 reais.