Markets Trim 2026 Inflation Forecast but Raise 2028 Estimate, Raising Long‑Run Concerns

Overview

• On Monday, July 20, market analysts cut their 2026 inflation forecast to 5.15%, the third weekly decline reported in the Banco Central’s Boletim Focus.
• The same survey showed the 2028 inflation projection rising from 3.70% to 3.78%, a shift economists say points to structural pressures rather than short-term noise.
• The Boletim Focus is a weekly Banco Central survey of more than 100 financial institutions that markets and policymakers use to track expectations.
• Market expectations for the Selic rate remain at 14% for year-end 2026, which implies one more rate cut is priced in this year, while GDP growth for 2026 (1.99%) and the end‑2026 exchange rate (R$5.20/USD) were left unchanged.
• Economists including Marcela Kawuati blame fiscal strains and credit subsidies for the 2028 revision and warn the de-anchoring could force slower easing or require tighter policy later, which would affect borrowing costs and household purchasing power.