Brazil Economists Raise Rate Forecasts Through 2029 After Lula Win

Brazilian economists raised their forecasts for interest rates through 2029 after President Luiz Inácio Lula da Silva’s reelection unsettled markets and weakened expectations of tighter fiscal policy. The central bank’s survey puts the benchmark Selic at 13.5% by year-end, 12.5% at the end of 2027, 11% in 2028 and 10.25% in 2029, while inflation is expected to remain above target. Most economists expect policymakers to hold the rate at 13.75% at Wednesday’s meeting, following five consecutive quarter-point cuts. Investors are watching whether Lula’s government can demonstrate fiscal discipline while maintaining social programs, as currency weakness and high borrowing costs could weigh on investment and growth.