Inter Revises Selic Forecast and Predicts End to Rate Cuts

Banco Inter has updated its expectations for Brazil's benchmark interest rate. The institution now projects that the Selic will end 2026 at 13.50 percent. The previous forecast was 13.25 percent.

The adjustment reflects a more conservative stance regarding fiscal uncertainties and worsening inflation outlooks. The bank's base scenario still anticipates a reduction at the next meeting of the Monetary Policy Committee. This move would be the final one before a prolonged pause lasting until the end of 2027.

The projection for the IPCA in 2027 rose from 3.9 percent to 5 percent. The bank warns that the twelve-month accumulated price index could reach 6 percent by February. Factors such as the dollar exchange rate and changes in fuel subsidies are putting pressure on service costs.

Despite the caution, Inter notes a slowdown in economic activity and credit. The labor market is showing evidence of cooling even with unemployment at low levels. The 13.50 percent rate is viewed as a restrictive level intended to contain future inflationary shocks.

The return of interest rate cuts will depend on the adoption of concrete fiscal measures by the government. The institution acknowledges that the Central Bank may choose to maintain current rates as early as the next meeting.