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Brazil Inflation Near Target, Rate Cuts Expected
24 Sep
Summary
- Brazil's central bank projects inflation near 3% target.
- Further interest rate cuts are anticipated this year.
- Economic growth forecasts for 2026 and 2027 were lowered.
Brazil's central bank has projected inflation to remain close to its 3% target at the policy horizon relevant for upcoming decisions. This forecast strengthens the likelihood of additional interest rate cuts later this year.
The monetary authority anticipates annual inflation at 3.1% for the second quarter of 2028, a key period for its November meeting. Projections suggest similar inflation levels through the first quarter of 2029.
Reflecting concerns about economic momentum, the bank lowered its 2026 growth forecast to 1.8% and, for the first time, projected 1.4% GDP growth for 2027. These estimates are more conservative than government projections.
The downward revision for economic growth this year is attributed to weaker-than-anticipated third-quarter indicators and a less robust second-quarter growth composition, with agriculture and extractive industries driving earlier GDP surprises.
