MercoPress. South Atlantic News Agency

Brazil's financial markets adjust 2025 projections for the worse

The BCB's Focus Bulletin maintained its forecast for the Selic basic interest rate of 14.75% per annum in 2025

Monday's issue of Brazil's Central Bank's (BCB) Focus Bulletin twitched last week's 2025 slightly for the worse, with higher inflation and a smaller Gross Domestic Product (GDP), Agencia Brasil reported. The study showed that the Broad Consumer Price Index (IPCA) should end 2025 at 4.96% from the 4.86% forecast last week. It was the 11th adjustment to the inflation projection and the ninth to the exchange rate between the local real and the US dollar.

The weekly report brings together the expectations of financial market agents, such as investment banks, asset managers, and other market institutions. In addition, the Focus Bulletin's estimate is more pessimistic than the official forecasts. The federal government estimates an IPCA of 3.1% for next year, according to the 2025 Budget Guidelines Law (LDO) approved by Congress.

For the ninth time in a row, the Focus Bulletin raised its forecast for the price of the dollar in 2025. According to the report, the currency is expected to stand at an average of R$ 5.96 next year from R$ 5.90 the week before. In turn, the LDO approved by Parliament predicted an average exchange rate of R$ 4.98 for next year.

On the other hand, this week's Focus Bulletin maintained its forecast for the Selic basic interest rate of 14.75% per annum in 2025. It currently stands at 12.25%. For 2026, the Bulletin forecasts a 12% rate when last week it had foreseen it would be 11.75%.

Regarding Brazil's Gross Domestic Product (GDP), the Focus Bulletin predicts a 1.8% growth in 2025, slightly lower than last week's 1.9% projection. It was the second week in a row that the financial market has lowered its GDP estimate for 2025. According to the LDO, GDP in 2025 will be 2.5%.