Brazil Ends 2025 With Inflation Expectations Easing and IGP-M in Deflation

Overview

• Banco Central’s Focus survey trimmed the median IPCA outlook to 4.32% for 2025 and 4.05% for 2026, with 2025 GDP held at 2.26%.
• The Selic stands at 15%, the cycle’s peak, while market medians point to 12.25% by end-2026 for a gradual easing path.
• FGV reported the IGP-M down 1.05% in 2025, signaling weaker producer-side pressures and affecting contracts indexed to the gauge.
• The real logged a strong year with the dollar down roughly 10% in 2025, though low-liquidity swings saw the currency tick up Monday and slip early Tuesday.
• Local curves showed short rates firming and long rates easing as traders recalibrated positions, with attention centered on the Fed’s minutes and Brazil’s Caged and Pnad releases.