Brazil's Selic Rate to Hit 14% in 2025, Inflation Above Target

Dec 16, 2024, 12:37 PM

Brazilian financial market analysts have revised their projections for key economic indicators, signaling expectations for higher interest rates and inflation in the coming years. According to the Central Bank's Focus report, the Selic rate, Brazil's benchmark interest rate, is expected to reach 14% by the end of 2025, up from the current 12.25%. This adjustment follows the Central Bank's recent decision to raise the Selic rate by 1 percentage point, with two more increases of the same magnitude anticipated. Inflation forecasts have also been revised upwards, with the Broad National Consumer Price Index (IPCA) projected at 4.89% for 2024 and 4.60% for 2025, both above the inflation target ceiling of 4.50%. The GDP growth estimate for 2024 was increased to 3.42%, while the dollar is expected to close this year at R$ 5.99 and R$ 5.85 in 2025. These projections reflect the market's response to the government's fiscal measures and the Central Bank's efforts to manage inflation expectations.