Brazil Focus Survey Cuts 2026 Inflation to 5.01% and Growth to 1.92%

BRAZIL · MARKETS

Economists polled by Brazil’s central bank trimmed their 2026 inflation forecast to 5.01% and cut growth to 1.92% on Monday, while keeping the Selic interest-rate path unchanged at 13.75% for year-end.

The Central Bank of Brazil headquarters in Brasília, which publishes the Focus survey every Monday. (Photo: Wikimedia Commons, CC BY 2.0)

What the Focus survey is and why foreigners read it

The Brazil Focus survey is the central bank’s weekly poll of more than 100 financial institutions. It publishes the median of their forecasts every Monday morning.

The medians cover inflation, growth, the Selic benchmark interest rate and the exchange rate. Markets treat the survey as the consensus view that policymakers read before rate decisions.

The Brazil Focus survey edition of this Monday, the last of August, brought two cuts. Neither was large, but both point in the same direction: a cooler economy with slightly gentler prices.

Inflation: first weekly cut, still above the ceiling

The median forecast for 2026 inflation, measured by the official IPCA index, fell from 5.02% to 5.01%. It is the first weekly improvement after two weeks stuck at 5.02%.

Brazil targets inflation of 3%, with a tolerance band of 1.5 percentage points in either direction. That puts the ceiling at 4.5%, and the forecast still sits half a point above it.

For 2027 the survey moved the wrong way, up from 4.25% to 4.28%. It was the third consecutive weekly rise for that horizon.

The longer anchors look steadier. Forecasts for 2028 and 2029 held at 3.80% and 3.50% respectively.

For context, official inflation ran at 0.07% in July and 4.44% over twelve months. The gap between that print and the year-end forecast is where the debate sits.

Growth: a second straight cut in an election year

In the Brazil Focus survey, the growth forecast for 2026 fell from 1.95% to 1.92%. That follows last week’s cut from 1.98%, making two consecutive weekly downgrades.

The survey sees 1.50% growth in 2027, 1.98% in 2028 and 2.00% in 2029. In plain terms, economists expect Brazil to grow at roughly half the pace of a healthy emerging market for two more years.

The timing is politically awkward. President Lula is running for re-election in October on the strength of the economy, and the consensus now sees deceleration into the vote.

Official second-quarter GDP figures are due this week. Economists expect just 0.2% growth on the quarter, down sharply from 1.1% in the previous reading.

Selic and the dollar: the unmoved parts of the table

The Selic benchmark currently stands at 14.00% a year, after the central bank began cutting earlier in 2026. The Brazil Focus survey held the year-end forecast at 13.75% for a third straight week.

That implies just one more quarter-point cut this year. The path then runs to 12% at the end of 2027, 10.50% in 2028 and 10% in 2029.

For anyone earning in dollars or euros, the message is that Brazilian rates stay high for years. Carry returns remain attractive, but so does the cost of capital for local companies.

On the exchange rate, the Brazil Focus survey kept the dollar at R$5.20 for the end of 2026. That median has not moved for ten weeks, and the 2027 and 2028 forecasts stayed at R$5.30.

What to watch from here

The first test is the GDP release this week. A figure below the 0.2% consensus would feed another cut to the 2026 growth median next Monday.

The second is the central bank’s September rate meeting. Traders on the B3 exchange are already pricing the decision through Copom options, with the Selic at 14.00% today.

The third is fiscal. July debt figures are expected to show gross debt near 82% of GDP, and a worse number tends to push rate forecasts up, not down.

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