Brazil economists see 12.00% 2026 yr-end Selic; prior 12.13%

Brazil economists see 12.00% 2026 yr-end Selic; prior 12.13%

Brazil Economists Adjust 2026 Selic Rate Forecast to 12.00%

Brazilian economists have revised their year-end 2026 forecast for the benchmark Selic rate to 12.00%, down from a prior projection of 12.13%, reflecting evolving expectations for monetary policy easing. The adjustment, revealed in recent surveys, aligns with growing anticipation of rate cuts later this year as inflation trends stabilize and economic growth remains subdued.

The Selic rate, currently at 15.00%—its highest level in nearly two decades—is expected to remain unchanged through December 2025, consistent with the Central Bank of Brazil's (BCB) strategy to curb inflation, which has consistently exceeded the 3% target. However, most analysts now predict the first rate cut will occur in March 2026, with the easing cycle progressing gradually through the year. This timeline marks a shift from earlier expectations of cuts in January, as political uncertainty and mixed inflation signals prompted a more cautious outlook.

Market participants surveyed by Valor indicate a consensus for the Selic to reach 12.00% by December 2026, with some forecasting a shallower easing path to 12.75% due to fiscal expansion risks in an election year. Analysts emphasize that the pace of cuts will depend on inflation expectations, fiscal policy clarity, and external factors such as the exchange rate. For instance, UBS BB's Alexandre de Ázara highlighted that the Central Bank is unlikely to act prematurely unless inflation forecasts align more closely with the 3% target.

Diverging views persist. While most economists anticipate cuts beginning in March or April, some, like Adam Capital's Juliano Cecílio, argue that fiscal stimulus could reignite inflation, leaving no room for easing in 2026. Conversely, Itaú Unibanco noted that a weaker global dollar and controlled inflation could allow for modest rate reductions.

The BCB's updated inflation projections, to be released alongside its March policy decision, will likely shape the trajectory of the easing cycle. With political risks and fiscal uncertainty lingering, the path of monetary policy remains contingent on evolving economic data and Central Bank communication.

Reuters, September 15, 2025: Reuters, September 15, 2025
Valor International, December 23, 2025: Valor International, December 23, 2025
Valor International, December 23, 2025: Valor International, December 23, 2025