Inflation in 2026: markets adjust expectations and signal a more benign scenario

The latest Focus Bulletin, a weekly survey that consolidates projections from around 120 economists, asset managers, and financial institutions, brought an important macroeconomic signal for Brazil: for the fourth time in 2026, the market has lowered its inflation forecast for the year.

According to the survey, the projected inflation rate measured by the Broad National Consumer Price Index (IPCA) was revised to 3.99% by the end of 2026, slightly below the previous estimate of 4%.

Although modest in percentage terms, this revision is meaningful in a macroeconomic context, as it signals growing confidence among economic agents that the price trajectory may remain closer to the official inflation target midpoint of 3%.

What is driving the revision

The Focus report also shows that, despite the downward revision in inflation expectations:

• The projected economic growth rate (GDP) for 2026 remains stable at around 1.8%, indicating that the market does not expect a sharp acceleration in activity, but rather a scenario of moderate and controlled growth.

• Expectations for the benchmark interest rate (Selic) remain elevated, with projections close to 12.25% by the end of 2026, reflecting analysts’ caution in light of structural challenges and external risks.

These figures reinforce an environment in which inflation and interest rates move together, supporting a still-restrictive monetary policy stance, even as signs of price easing emerge.

Why this matters for businesses and investments

1. High cost of capital remains a constraint: persistently high interest rates tend to increase financing costs for both companies and consumers. Credit-dependent sectors such as retail, construction, and services may continue to face pressure on consumption and expansion.

2. More predictable pricing environment: lower inflation expectations help anchor cost and revenue forecasts, facilitating financial planning and long-term strategic decisions.

3. Impact on assets and financial markets: Inflation projections under control may reduce pressure on interest-rate-sensitive assets, such as fixed income and corporate debt, while also creating room for longer-term investment projects if the macroeconomic environment remains benign.

The macroeconomic backdrop beyond inflation

Other recent market signals align with a more moderate outlook for the Brazilian economy in 2026:

1. Annual inflation has already shown signs of deceleration in recent months, coming in below expectations in independent surveys even before the Focus report was released.

2. Recent decisions by the Central Bank suggest a potential gradual reduction in the Selic rate over the year, albeit with a cautious interpretation given external uncertainties and the need to keep inflation expectations anchored.

Together, these factors indicate that Brazil may be entering a clearer phase of macroeconomic stabilization, characterized by controlled inflation, interest rates in a gradual adjustment process, and consistent—though moderate—economic growth.

The slight downward revision in inflation expectations for 2026 shows that the market continues to recalibrate its outlook based on softer price indicators and a global environment less pressured by inflationary shocks.

For corporate managers, investors, and strategists, this movement reinforces the importance of:

• financial planning focused on the cost of capital,

• sensitivity analysis under prolonged high-interest-rate scenarios,

• projecting real growth adjusted to moderate domestic demand, and

• leveraging a more predictable pricing environment for medium- and long-term operations.

In summary, the adjustment in inflation expectations is not just a statistical update—it is a signal that the market is refining its assessment of risk, consumption, prices, and returns looking ahead to 2026.