*Brazil’s central bank (BCB) has released the latest edition of its Focus bulletin, a weekly survey containing the projections of private sector economists and analysts, which showed an annual inflation forecast of 5.10% for 2025, down from 5.24% a month ago, and 4.45% for 2026, down from 4.50% a month ago. This latest 2025 forecast is above the BCB’s continuous target range of 3.0% +/-1.5, but the updated 2026 projection is within the target range. The last time that the Focus bulletin’s 2026 projection was below 4.50% was in March. As of June, Brazil’s annual inflation rate stood at 5.35%. In an open letter published on 10 July, the BCB stated that it expects this rate to fall below 4.50% by the end of the first quarter of 2026. The expectation of a slowdown in inflation next year represents a boost for the government of President Luiz Inácio Lula da Silva. Although he has not yet announced a re-election bid, it is widely expected that he would be the most competitive left-wing candidate in the October 2026 presidential race if he were to run. If concerns over inflation and the cost of living were to ease next year, it could help to boost public morale and reduce the chances of an anti-incumbent swing in the presidential election.
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