Rate was 4.46% in the 12 months up to November, within the range allowed by the target
The (Central Bank) reduced Brazil’s inflation estimate in the 1st quarter of 2026 from 4.0% to 3.6%. The monetary authority calculated the projections based on the perspectives of financial agents for the basic rate, the Selic, and for the dollar. The BC released the Monetary Policy Report this Thursday (Dec 18, 2025). Here is the document (PDF – 3 MB).
Inflation lasted until November, within the range allowed by the target, which is 3%, with a tolerance of up to 4.5%.
The monetary authority estimates inflation at 4.4% in December. The previous projection was 4.8%. Read in the infographic below the trajectory predicted by the BC based on the scenario expected by financial agents in the Focus Bulletin.
“Inflation continues to fall, but remains above the target until the end of 2027”said the BC. The monetary authority expects an IPCA (Broad National Consumer Price Index) rate of 3.5% at the end of 2026.
The Central Bank declared that inflation projections fell in relation to the previous report, from September, because there was a more favorable behavior in short-term inflation, an improvement in inflation expectations and the drop in fuel prices associated with cheaper dollars and oil.
The Central Bank said that the probability of inflation exceeding the upper limit of the target (4.5%) is 26% in 2025. In 2026, the chances drop to 23%.
The product gap – the difference between the economy’s effective GDP and potential GDP – remains at positive levels, putting pressure on inflation, according to the BC. This means that the economy is operating above potential, with strong demand, which tends to put pressure on inflation.
“The estimated output gap for the third and fourth quarters of 2025 is 0.5% and 0.2%, respectively. Positive and decreasing values for the gap are consistent with the inflationary pressure observed recently”said the BC.
The Central Bank considers the neutral real interest rate to be 5% – a level that neither stimulates nor contracts the economy. THE Poder360 has already shown that Brazil has the 2nd highest real interest rate on the planet, around 9.44%.
