Key facts
- Brazil's central bank projects inflation at 3.1% in Q2 2028 and Q1 2029.
- The bank lowered its 2026 GDP growth forecast to 1.8% from 2.0%.
- The bank projects 1.4% GDP growth in 2027.
- The government projects 2.0% GDP growth in 2026 and 2.3% in 2027.
- The downward revision for this year reflects weaker-than-expected activity and less favorable growth composition.
Brazil's central bank projected inflation close to its 3% target at the key horizon for its next interest-rate decision, reinforcing expectations for further easing this year. The bank forecast annual inflation at 3.1% in the second quarter of 2028 and at the same level through the first quarter of 2029. These projections are likely to bolster market bets that the bank will deliver an additional rate cut this year, after it reduced its benchmark Selic rate by 25 basis points to 13.75% last week. The monetary authority also lowered its forecast for 2026 economic growth to 1.8% from 2.0%, while for the first time projecting gross domestic product (GDP) growth of 1.4% in 2027. These estimates are more cautious than forecasts released by President Luiz Inacio Lula da Silva's government, which projects GDP growth of 2.0% in 2026 and 2.3% in 2027. Policymakers cited early indicators from the third quarter pointing to weaker-than-expected activity and a less favorable composition of growth in the second quarter for the downward revision.