Brazil Economists Trim 2027 Inflation Forecast After Six Months

Brazil's central bank chief Gabriel Galipolo has emphasized maintaining interest rates at a restrictive 15% to address the slow convergence of inflation expectations towards the official 3% target. Despite a recent decline in inflation forecasts for 2027—from 4% to 3.97%—inflation expectations remain above target, with projections at 4.86% for 2025 and 4.33% for 2026. The central bank paused its aggressive rate hike cycle last month after a 450 basis-point increase, allowing time to assess monetary policy effects amid a strengthening real and signs of economic slowdown. Policymakers remain committed to re-anchoring inflation expectations, recognizing that unanchored expectations could increase the cost of disinflation on economic activity. The firmness of the Selic rate is seen as bolstering investor confidence and supporting fiscal resilience in Latin America's largest economy. Overall, Brazil's monetary policy stance signals vigilance and discipline to ensure inflation gradually aligns with the target while sustaining economic stability.