Market cuts Selic outlook for 2026, revises inflation

On August 3, 2026, the Focus Bulletin released by the Central Bank indicated that the benchmark interest rate (Selic) is expected to close the year at 13.75%. The same release recorded the fifth consecutive week of downward revisions to inflation expectations, which now stand at 5.03% for 2026.

Selic outlook for 2026

The 13.75% projection represents the first Selic reduction since March 2026, when the median moved from 12.13% to 12%. In the previous week, the market expected the rate to finish the year at 14%, a value 0.25 percentage point above the new estimate. The current rate, set by the Monetary Policy Committee on June 17, remains at 14.25%.

Inflation, GDP and exchange rate projections

The official consumer price index (IPCA) has been adjusted downward in recent weeks, falling from 5.12% last week to 5.03% in this bulletin. Four weeks ago, the expectation was 5.30%. Projections for Gross Domestic Product (GDP) growth and the dollar exchange rate have remained stable for at least five weeks, with GDP at 1.99% and the dollar at R$ 5.20. For 2027, the GDP outlook slipped from 1.60% to 1.57% and the dollar rate from R$ 5.29 to R$ 5.28.

Selic perspective for 2027 and 2028

Forecasts for the benchmark rate over the next two years stayed unchanged: 12% for 2027 and 10.5% for 2028. This stability indicates that the market still expects a gradual decline in the Selic over the planning horizon.

Impact of Selic variations on credit and consumption

When the Copom raises the Selic, the goal is to curb heated demand by making credit more expensive and encouraging saving. Higher interest rates can therefore make economic expansion more difficult. Conversely, a rate cut tends to make credit cheaper, stimulating production and consumption, although it reduces control over inflation.

Upcoming Copom decisions

The next Monetary Policy Committee meeting is scheduled for August 4 and 5, when macroeconomic conditions and inflation targets will be assessed to decide any adjustments to the Selic rate.

With information from Agência Brasil.