Brazil 2Q26-MPR: Forget About the Inflation Target in 2026-27—Above-Target Inflation Forecasts Through End-2028 (Ramos)

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Brazil 2Q26-MPR: Forget About the Inflation Target in 2026-27—Above-Target Inflation Forecasts Through End-2028 (Ramos)

Economics Research

25 June 2026 | 8:05AM EDT

Brazil 2Q26-MPR: Forget About the Inflation Target in 2026-27—

Above-Target Inflation Forecasts Through End-2028 (Ramos)

Bottom Line: The quarterly Monetary Policy Report (MPR) did not bring much new Alberto Ramos

+1(212)357-5768 |

information beyond that conveyed in the Copom minutes published on June 23. The alberto.ramos@gs.com

Goldman Sachs & Co. LLC

baseline scenario for inflation remains challenging, with the conditional forecasts above the

3.0% target across the entire 6-quarter relevant horizon for monetary policy (1Q28 for the

Aug and Sept meetings), and with inflation remaining slightly above the target over the

distant 4Q28. We highlight that at the next Copom meeting the relevant horizon for

monetary policy shifts to 1Q28 (for which the Copom forecast is at 3.2%), and for the

Copom meetings during 4Q26 the relevant horizon will be 2Q28 (for which the central bank

forecast is 3.2%). These forecasts suggest the need for, ceteris paribus, a Selic rate path on

average above that expected by the market in the Focus survey in order for inflation to

converge to the target within the relevant horizon; a stronger BRL and/or weaker activity

would improve the inflation projection path. The estimated neutral real rate (r*) remained

at 5.0%. The forecast for 2026 real GDP growth was upgraded by 40bp to 2.0%. In its

projections the central bank considers a “strong” El Niño. Under the Reference Scenario, the

probability that inflation will exceed the 4.5% upper limit of the inflation target band rose

to 79% for 2026 (vs 30% in 1Q MPR), and to 28% for 2027 (vs 19% in the 1Q MPR). The