The financial market has once again raised its projection for Brazilian inflation in 2026. According to data released this Monday (1st) by the Central Bank, through the Focus Bulletin, the expectation for the Broad National Consumer Price Index (IPCA) went from 5,04% to 5,09% this year.
This is the twelfth consecutive week of increases in analysts' estimates, consolidating a scenario of concern regarding price behavior and widening the gap with the official target set by the National Monetary Council (CMN).
The new percentage exceeds the maximum limit allowed by the inflation targeting system adopted by the country. Currently, the central target is 3%, with a tolerance margin of 1,5 percentage points above or below. In practice, this means that inflation should remain between 1,5% and 4,5%.
With the new projection of 5,09%, the market is already anticipating a result above the established ceiling for this year.
Fuel and war pressures in the Middle East
The revision of expectations occurs amid the impacts of the war in the Middle East on global markets.
The conflict has put pressure on international oil prices, increasing fuel costs and directly affecting inflation in several countries, including Brazil.
Besides fuel, food also continues to exert a significant influence on price indices. In April, the IPCA (Brazilian consumer price index) registered an increase of 0,67%, driven mainly by food costs.
Despite this, the accumulated figure for the last 12 months remains at 4,39%, according to the Brazilian Institute of Geography and Statistics (IBGE), still within the range allowed by the inflation targeting regime.
Projections for the coming years have also been updated. For 2027, the expectation rose from 4,01% to 4,02%. For 2028 and 2029, the estimates remain at 3,66% and 3,5%, respectively.
The Central Bank is monitoring the external scenario.
The rise in inflation projections is increasing attention on the upcoming decisions of the Monetary Policy Committee (Copom), which is responsible for setting the economy's basic interest rate.
Currently, the Selic rate is at 14,5% per year.
At the meeting held in April, the board decided to reduce the rate by 0,25 percentage points, continuing the monetary easing process initiated earlier.
Between June 2025 and March 2026, interest rates remained at 15% per year, the highest level recorded in almost two decades.
The slowdown in inflation allowed for the start of rate cuts, but the worsening tensions in the Middle East have become a new cause for concern for the Central Bank.
In the minutes of its last meeting, the Copom (Monetary Policy Committee) avoided signaling the next steps in monetary policy, only highlighting that it is monitoring developments in the international conflict and its possible impact on prices in Brazil.
The next committee meeting is scheduled for June 16th and 17th.
The market maintains its expectation of a gradual decrease in interest rates.
Even with inflation above target, the financial market continues to project a trajectory of Selic rate reductions in the coming years.
According to the Focus Bulletin, the rate is expected to end 2026 at 13,25% per year.
The projection for 2027 is 11,25%, while for 2028 and 2029 the expectation is 10% per year.
The Selic rate is the main instrument used by the Central Bank to control inflation. Higher interest rates make credit more expensive, reduce consumption, and help to contain rising prices.
On the other hand, high interest rates also tend to slow down investment and limit economic growth.
When interest rates fall, credit becomes more accessible, stimulating economic activity but reducing some control over inflation.
The economy is showing resilience.
Despite the more pressured inflation environment, the outlook for economic growth remains relatively stable.
The market forecast for Gross Domestic Product (GDP) in 2026 has been revised from 1,89% to 1,9%.
For 2027, the estimate remains at 1,7%, while for 2028 and 2029 the projected growth is 2% per year.
The numbers reflect the positive performance of the Brazilian economy in recent years. In 2025, the country recorded an expansion of 2,3%, marking the fifth consecutive year of growth.
In the first quarter of 2026, economic activity advanced 1,1% compared to the previous three months. Over the past 12 months, the expansion reached 2%, according to IBGE data.
The dollar is expected to remain above R$5.
Financial institutions also maintained their exchange rate projections.
The expectation is that the dollar will end 2026 quoted at R$ 5,16.
By the end of 2027, estimates point to the US dollar at R$ 5,25.
Exchange rate behavior will continue to be one of the factors observed by the market and the Central Bank, since fluctuations in the US dollar can directly influence the prices of imported products and further pressure inflation.
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