Inflation and rate forecasts rise together after the election

The first Focus survey after Lula’s reelection shows economists lifting inflation and Selic forecasts. Foreign investors face a less favourable combination of currency, duration and growth risks.

Source-based facts

Reuters reports that the median 2027 inflation forecast rose to 4.76% from 4.34%. The end-2026 Selic forecast increased to 13.50% from 13.25%, while the end-2027 estimate rose to 12.50% from 11.75%. The survey records market expectations, not guaranteed outcomes or a Central Bank commitment.

Observer analysis

Foreign-investor risk: higher expected inflation can weaken the real and erode returns translated into dollars or euros. Higher-for-longer rates can reduce the market value of existing fixed-rate bonds, raise corporate refinancing costs and compress equity valuations. The combination is particularly difficult for domestically focused, leveraged companies because expensive credit and weaker purchasing power can arrive together.

What could reduce the risk

Forecasts can reverse if fiscal policy gains credibility, the currency stabilizes or inflation surprises lower. High rates may support the real and floating-rate income. Investors should track subsequent Focus revisions, breakeven inflation, the yield curve and Copom communication rather than treating one survey as destiny.

Original source

Reuters · Marcela Ayres
Brazil economists raise inflation, rate forecasts after Lula reelection ↗
3 November 2026

UOL Economia
Mercado eleva projeções da inflação e vê juros mais altos nos próximos anos ↗
3 November 2026