The Central Bank of Brazil sees a 26% chance that inflation will exceed the upper limit of its target tolerance range in 2025, according to its fourth quarter Monetary Policy Report released Thursday, a significant improvement from 71% in the previous document.
The probability of exceeding the target is 23% for 2026, down from 26%, and 16% for 2027, from 17%.
BCB expects inflation to return to the 3% target in the first quarter of 2028, but inflation remains within the tolerance range of 1.5 percentage points throughout the entire projection period.
"Since the previous report, current inflation and inflation expectations have declined but remain above the 3% inflation target," the document said.
The central bank forecasts inflation at 3.2% by the relevant horizon in the second quarter of 2027, down from 3.4% in the September report. (See MNI INTERVIEW: BCB January Cut Still On The Table - Le Grazie)
