Private-sector economists raised their forecasts for Brazil's inflation and interest rates in the first weekly central bank poll since Lula's reelection. They also cut growth forecasts and projected a weaker real. The central bank announces its next rate decision on Wednesday.
Brazilian economists now expect higher prices and higher borrowing costs after President Luiz Inacio Lula da Silva's win. In the first weekly poll since his October 25 reelection, private-sector economists raised their forecasts for the country's inflation and interest rates, the survey showed on Tuesday.
Inflation and rate forecasts move up
The forecast for inflation at the end of 2027 rose to 4.76% from 4.34%. Brazil's central bank has an inflation target of 3%, plus or minus 1.5 percentage points.
Expectations for the benchmark interest rate also climbed. Economists now see it at 13.50% at the end of 2026, up from 13.25%, and at 12.50% at the end of 2027, up from 11.75%.
Growth outlook and the real weaken
Growth forecasts moved the other way. Economists cut their GDP growth forecasts for 2026 and 2027 to 1.76% and 1.2%, from 1.8% and 1.31% in the previous survey.
The Brazilian real is also expected to be weaker. The poll forecast it at 5.34 per US dollar at the end of 2026 and 5.40 at the end of 2027, compared with 5.05 and 5.15 in the previous survey.
Election result drove a selloff
Lula's victory over right-wing Senator Flavio Bolsonaro, whom investors had viewed as the more market-friendly candidate, triggered a sharp selloff in Brazilian assets last week.
The central bank's board is set to announce its next rate decision on Wednesday, after five straight 25-basis-point cuts that brought the Selic rate to 13.75%.
Source: Investing.com (Reuters)
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