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Brazil's High-Rate Therapy And The Market's Quiet Vote Of Confidence
(MENAFN- The Rio Times) Key Points
Brazil's Focus report, a poll of banks and consultancies, is the country's dashboard of expectations. The latest edition shows how Brazil hopes to escape the hangover from cheap credit and heavy state intervention: by keeping money tight while aiming for a controlled“soft landing”.
For 2025, economists now expect GDP growth of 2.25%, up from 2.16% a month ago. The central bank is more cautious. In its own report, it cut its 2025 growth forecast from 2.1% to 2.0%, citing weaker third-quarter data and the drag from new US import tariffs on Brazilian goods.
On prices, the Focus survey now sees the IPCA index at 4.40% in 2025 and a little above 4% in 2026. That remains above the 3% target, but closer to the new“continuous” band of 1.5% to 4.5%.
High Rates Steady Course
The bank's internal path is sterner, with inflation at 4.6% in 2025, 3.6% in 2026 and approaching 3.3% by mid-2027, after being forced to write an open letter explaining an earlier overshoot.
The cost of that stance is the Selic rate. It has been frozen at 15% for three meetings, and markets expect it to end 2025 at that level before sliding only slowly to around 12% in 2026 and below 10% by 2028. With inflation near 4.4%, Brazil is running one of the highest real interest rates anywhere.
The currency completes the picture: markets see the dollar at about 5.40 reais at the end of 2025 and 5.50 in later years, a weak exchange rate that helps exporters and yield-hunters but keeps imports expensive for households.
For expats and foreign investors, Brazil is no longer a playground for easy money and promises. It is a high-yield, high-discipline market where the central bank is determined not to repeat the errors of looser, more populist years.
Forecasters now see slightly better growth and lower inflation in 2025, though still above Brazil's official target.
The central bank is holding a 15% rate and signals it can tighten again if fiscal or price risks flare up.
High real rates, a weak currency and new US tariffs keep Brazil attractive for investors but painful for borrowers.
Brazil's Focus report, a poll of banks and consultancies, is the country's dashboard of expectations. The latest edition shows how Brazil hopes to escape the hangover from cheap credit and heavy state intervention: by keeping money tight while aiming for a controlled“soft landing”.
For 2025, economists now expect GDP growth of 2.25%, up from 2.16% a month ago. The central bank is more cautious. In its own report, it cut its 2025 growth forecast from 2.1% to 2.0%, citing weaker third-quarter data and the drag from new US import tariffs on Brazilian goods.
On prices, the Focus survey now sees the IPCA index at 4.40% in 2025 and a little above 4% in 2026. That remains above the 3% target, but closer to the new“continuous” band of 1.5% to 4.5%.
High Rates Steady Course
The bank's internal path is sterner, with inflation at 4.6% in 2025, 3.6% in 2026 and approaching 3.3% by mid-2027, after being forced to write an open letter explaining an earlier overshoot.
The cost of that stance is the Selic rate. It has been frozen at 15% for three meetings, and markets expect it to end 2025 at that level before sliding only slowly to around 12% in 2026 and below 10% by 2028. With inflation near 4.4%, Brazil is running one of the highest real interest rates anywhere.
The currency completes the picture: markets see the dollar at about 5.40 reais at the end of 2025 and 5.50 in later years, a weak exchange rate that helps exporters and yield-hunters but keeps imports expensive for households.
For expats and foreign investors, Brazil is no longer a playground for easy money and promises. It is a high-yield, high-discipline market where the central bank is determined not to repeat the errors of looser, more populist years.
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