Brazil’s central bank projected annual inflation at 3.1% in the second quarter of 2028, the policy horizon relevant to its November interest-rate decision, and at the same level through the first quarter of 2029. The outlook reinforces expectations for another rate cut this year after the bank reduced the benchmark Selic rate by 25 basis points to 13.75% last week, its fifth consecutive cut, while leaving the next steps open. The bank also lowered its 2026 economic growth forecast to 1.8% from 2.0% and projected GDP growth of 1.4% in 2027 for the first time. Those estimates are below the Brazilian government’s forecasts of 2.0% growth in 2026 and 2.3% in 2027. Policymakers attributed the 2026 downgrade to early third-quarter indicators showing weaker-than-expected activity and to a less favorable composition of second-quarter growth. They said April-to-June GDP surprises were concentrated in less cyclical sectors, especially agriculture and extractive industries, while more economically sensitive supply sectors and household consumption fell short of expectations. The 2027 outlook assumes restrictive monetary policy, limited spare capacity, a highly uncertain external environment, fading fiscal and credit support, and a smaller contribution from agriculture and extractive industries.