Inflation eases, but still sits above target
The latest Focus survey points to a gentler inflation path for 2026. Market economists now see 2026 IPCA inflation at 5.16%, down from 5.30% a week earlier. That matters because the market had been lifting its forecast repeatedly in recent weeks.
June brought some relief on prices. Brazil’s mid-month inflation index, the IPCA-15, rose 0.41% in June, below market expectations. The full monthly IPCA rose 0.16% in June, with the 12-month rate at 4.64%. That keeps inflation above the central bank’s target band, but it signals slower pressure than earlier in the year.
Food prices played an important role in the easing trend. A softer food bill helped cool the monthly reading and supported the shift in expectations.
The National Consumer Price Index, which helps guide wage negotiations for many workers, also rose more slowly. It increased 0.14% in the month and 4.33% over 12 months.
Growth and rates stay stable
The market sees no major change in growth forecasts. GDP is still projected to expand 1.99% in 2026, 1.65% in 2027 and 2.0% in 2028.
That stability also extends to the exchange rate. Analysts expect the real to end 2026 at BRL 5.20 per US dollar.
The Selic outlook has also held firm. The year-end 2026 forecast remains 14.0%, after Banco Central do Brasil kept the policy rate at 14.25%. The bank had previously taken the rate to 15%, and that level held until March 2026.
This leaves Brazil with still-elevated real rates. That supports local fixed income, even as it keeps pressure on credit-sensitive activity. Meanwhile, the central bank’s signal of future easing suggests rate cuts could still arrive later in 2026, depending on inflation behaviour.
For investors, the message is clearer than the numbers alone suggest. Brazil now offers a more stable macro backdrop, but not yet a low-rate one. That favours duration in fixed income, selective FX positioning and a cautious view on domestic demand sectors until disinflation becomes more durable.
Watch the next Focus survey and the central bank’s August meeting for signs that the Brazil inflation outlook is turning from stabilisation into a true easing cycle.
