Brazil's central bank sees inflation still missing target in early 2028

Core Insights - Brazil's central bank projects inflation to remain near the official target but will not meet it, forecasting 3.1% for Q1 2028, down from 3.4% for Q1 2027 [1][2] - The central bank maintains a target inflation rate of 3% with a tolerance band of 1.5 percentage points [2] - Interest rates are held at 15%, indicating a prolonged pause in monetary policy to control consumer prices [2] Inflation Forecasts - The central bank has lowered its 2025 inflation forecast to 4.8% from 4.9% and kept the 2026 projection at 3.6% [3] - Factors contributing to inflation include a dynamic labor market and increased residential electricity costs, while the appreciation of the real and reduced inflation expectations are seen as downward pressures [3] GDP Growth Projections - The GDP growth forecast for 2025 has been reduced to 2.0% from 2.1%, reflecting expected moderation due to recent monetary policy tightening [3] - For the first time, the central bank has projected GDP expansion for 2026 at 1.5% [4]