Brazil Raises 2026 Inflation Outlook as High Interest Rates Expected to Slow Growth

Brazil Raises 2026 Inflation Outlook as High Interest Rates Expected to Slow Growth

BRAZIL: Brazil's government now expects inflation in 2026 to remain above the central bank's target, citing faster price increases for manufactured goods, particularly personal care products, while services inflation remains elevated. Officials noted that underlying inflation indicators have eased in recent months. The government maintained its 2026 economic growth forecast at 2.3%, saying activity stayed resilient through May, but warned that high real interest rates will gradually curb growth. In June, the central bank cut its benchmark Selic rate by 25 basis points to 14.25% while signaling borrowing costs will remain restrictive. The government also raised its 2027 inflation forecast to 3.6% and lowered its 2027 GDP growth estimate to 2.5%.

Source: Reuters