Exchange Rate Pressures Inflation Forecasts Ahead of Copom Decision
Financial markets adjust expectations and project Selic to remain at 13.75% as the real weakens against the dollar.
The Central Bank's Monetary Policy Committee sets the new benchmark interest rate this Wednesday. Financial markets have shifted their bets and now expect the Selic rate to remain at 13.75% per year. This change follows the results of the presidential election runoff.
Economist Tatiana Pinheiro notes that the exchange rate is a decisive factor for the monetary authority's revision of inflation projections. The Brazilian currency is depreciating and trading around 5.35 reais per dollar. This movement puts pressure on domestic prices within the economy.
Beyond the exchange rate, expectations gathered in the Focus report show an increase in expected inflation for 2026 and 2027. Factors such as fuel prices and the effects of tax reform contribute to this rise. The projection for the 2028 horizon could climb from 3.2% to 3.5%.
The expectation is that the Central Bank will maintain a stance of looking beyond short-term volatility. The appointment of the economic team and the fiscal guidelines of the new government are fundamental points for asset stabilization. The current moment is described as a transition phase that requires clarity regarding the country's fiscal policy.
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