The financial market has once again raised its average estimate for inflation in 2026, which rose to 5.33%. This is the fifteenth consecutive week of increases. Economists have also started projecting only one more interest rate cut in 2026, down to 14% per year, at the August meeting of the Monetary Policy Committee (Copom) (see more below in this report). The expectations are part of the "Focus Bulletin," released on Monday (22) by the Central Bank (BC), based on a survey conducted last week with over 100 financial institutions. The explanation is that the war in the Middle East has caused oil prices to soar and, therefore, has the potential to push up Brazilian inflation (via rising fuel prices).
Now on g1 With the announced peace agreement between the United States and Iran, oil prices have already dropped at the start of this week, trading around $78 a barrel. ➡️ For 2026, the inflation estimate rose from 5.30% to 5.33%; ➡️ For 2027, the expectation increased from 4.10% to 4.15%; ➡️ For 2028, the forecast rose from 3.68% to 3.70%; ➡️ For 2029, the estimate remained at 3.50%. Since the beginning of 2025, with the adoption of the continuous target system, the goal is to keep inflation at 3%, considered on target if it ranges between 1.50% and 4.50%. 🔎 Why does this matter? The higher the inflation, the lower the population's purchasing power — especially among lower-wage earners.
This happens because prices rise while wages do not keep pace with this increase. Food inflation has been an uncomfortable issue for Lula's administration, whose popularity indicators are worsening Getty Images via BBC Interest rate cuts Even with the higher inflation projection for this year and the coming ones, the financial market continues to project falling interest rates. Currently, the rate is at 14.25% per year — following three cuts this year. The market's estimate for the Selic rate at the end of 2026, however, rose from 13.75% to 14% per year last week, factoring in one final rate reduction this year, in August. Before the US-Iran war, market economists believed the interest rate would end the year at 12.5% per year. For the close of 2027, the market projection remained at 12% per year. For the end of 2028, analysts' estimate remained at 10.25% per year. Economic activity For Gross Domestic Product (GDP) growth in 2026, the market estimate rose from 1.96% to 1.98%. The official GDP result for last year was a 2.3% expansion, according to official data released by the Brazilian Institute of Geography and Statistics (IBGE). ➡️ Gross Domestic Product (GDP) is the sum of all goods and services produced in the country and is used to measure economic performance. For 2027, the GDP growth projection remained at 1.70%. Exchange rate The financial market maintained its estimate for the exchange rate at the end of this year at R$ 5.20 per dollar. For the close of 2027, the projection by bank economists rose from R$ 5.25 to R$ 5.27 per dollar.
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