MNI BRIEF: BCB Sees Inflation Back In Target Range By Q1 2026

The Central Bank of Brazil expects inflation to return to the 3% target range by the end of the first quarter of 2026, according to the noncompliance letter published on Thursday.

As inflation remained above 4.5% for six consecutive months — the upper limit of the range, which allows for a deviation of 1.5 percentage points in either direction — the BCB was required to submit a letter explaining the reasons behind the breach, as well as outlining a strategy and timeline for bringing inflation back to target. The document was addressed to the Finance Minister.

"Inflation above the tolerance range is the result of several factors, such as strong economic activity, unanchored inflation expectations, inflationary inertia, and currency depreciation," the letter said.

"The Central Bank is committed to the 3.00% inflation target, and its decisions are guided by the goal of reaching this target within the relevant monetary policy horizon," it added. (See MNI INTERVIEW: No BCB Shift After U.S. 50% Tariffs - Volpon)