Focus Bulletin Inflation Forecast Below 5%

Inflation Forecast is a crucial topic for the Brazilian economy, especially with recent projections that point to inflation below 5% in 2025. In this article, we will address the economic slowdown that is reflected in high interest rates, currently at 15% per year, and how indicators such as the IBC-Br signal a cooling in economic activity.

We will also analyze the impact of the exchange rate devaluation and expectations for GDP and the Selic rate in the coming years, in addition to discussing projections for 2026 and the possible start of interest rate cuts.

Projected Inflation for 2025

The Focus Bulletin projects the IPCA of 4,95% for 2025, signaling a controlled inflationary pressure.

With the Selic rate maintained at 15% per year, the economic scenario tends to moderate the pace of growth, reflecting on inflation forecasts.

High interest rates act as a mechanism to contain rising prices, being essential to guarantee the economic slowdown.

According to a report published by the Central Bank Focus Report, this dynamic helps to approach the inflation target of 4.5%.

The combination of these factors indicates that monetary policy continues to play a crucial role in economic stabilization, aiming to keep inflation at acceptable levels.

Thus, it is expected that the adjustment in policies will effectively contribute to overcoming the challenges imposed on the national economic scenario.

Economic Activity Dynamics and Projections

The dynamics of Brazilian economic activity show clear signs of cooling, with indicators such as the IBC-Br showing a significant slowdown in both industrial and service operations.

In this scenario, the exchange rate devaluation, which registered a drop of 12.5% throughout the year, has played a crucial role in reducing inflation, which stood at 0.26% in July, below expectations.

Projections indicate that, for 2025, GDP should grow by 2.21% and the Selic rate should remain at 15%, with prospects of interest rate cuts at the end of the year, while inflation is expected at 4.95% and at 4.40% for 2026.

Slowdown Measured by Activity Indicators

The Central Bank's Economic Activity Index (IBC-Br) has indicated a economic slowdown, in line with the behavior of the IPCA in July, which was 0.26%, below the expectation of 0.35%.

This picture is largely influenced by current monetary policy, with the interest rate at 15% per year, highlighting the deeper effect of economic decisions on the market.

Indicator	Value	Expectation
IBC-Br accumulated	-0,10%	0,10%
July IPCA	0,26%	0,35%

O impact of high interest rates is reflected in the decline in economic activity, with data confirming this trend.

Furthermore, this situation reinforces the prospect of a weakened economy, where lower-than-expected inflation also indicates lower inflationary pressure.

Thus, the economic scenario is a direct response to the monetary control imposed to tame inflation in the country.

Effect of Currency Devaluation on Inflation

The exchange rate devaluation of 12,5% throughout the year has a significant influence on inflation projected for 2025. As a result, there is a reduction in the costs of imported products, allowing consumers to access goods at more competitive prices.

Furthermore, the relief on industrial goods It is noticeable, since the pressure on the costs of imported raw materials decreases, favoring domestic production.

This dynamic, in turn, has a direct influence on the IPCA projection, which adjusts towards lower values.

All of these factors contribute to a more optimistic economic scenario.

• Lower cost of imports facilitates access to external products.
• Relief on industrial goods benefits domestic production.
• Influence on IPCA projection adjusts inflation expectations downwards.

For more details on the economic outlook, see the Brazil Macro Monthly Report.

GDP and Selic projections for 2025-2026

Growth projections for GDP in 2025 indicate a rate of 2.21%, while for 2026 the expectation is 1,87%.

These projections reflect the impact of a restrictive monetary policy over the years, conditioned by Focus report analysis.

The combination of controlled inflation and moderate economic growth highlights the need for adjustments in fiscal and monetary policy, in line with the global and domestic scenario.

With the Selic rate fixed at 15% until the end of 2025, the financial market is already predicting a expectation of beginning of cuts in the rate, as macroeconomic conditions evolve.

This expectation indicates a possible easing of credit conditions and a stimulus to investment in the next economic cycle.

The stabilization of inflation, combined with the significant slowdown in economic growth, may justify a more flexible monetary policy.

Therefore, market observers should remain alert to the changes in Central Bank expectations and its impact on future economic strategy.

In conclusion, forecasts for inflation and economic growth indicate a challenging scenario, but with hope of improvements from 2026 onwards, if interest rates are adjusted.

Monitoring these indicators will be essential to understanding the next steps for the Brazilian economy.