Brazil’s inflation rate decelerated to 4.26% in 2025, falling within the National Monetary Council’s official target range earlier than anticipated. This decline, driven by cheaper fuel prices, a stronger currency, and tightened monetary policy, marks the lowest inflation level since 2018. The central bank has held the Selic rate steady at 15% since July after an aggressive 450-basis-point tightening cycle. However, the latest data have raised expectations for monetary easing starting as early as January 2026, potentially leading to more accommodative financial conditions later in the year.
Economic activity indicators, including the IBC-Br index which rose 0.7% in November 2025, alongside record low unemployment and improved manufacturing and retail performance, reinforce a backdrop of resilient domestic growth. This has tempered market expectations for rapid policy easing, as the central bank balances inflation control with growth support. Brazil’s Ibovespa index has shown strong performance, gaining nearly 35% year-on-year, though recent volatility reflects caution ahead of the January policy meeting.
Brazil’s trade outlook remains positive, with the Ministry of Development projecting a 2026 surplus between $70 billion and $90 billion, supported by robust commodity exports despite some downside from geopolitical uncertainty. The EU-Mercosur trade agreement and expanding relationships with China and other markets provide further export diversification prospects. Agricultural production is also positioned for record outputs, though farmers face margin pressure amid high interest rates and input costs in 2026.
Overall, Brazil’s energy infrastructure refinancing by GNA occurs in a macroeconomic context of easing inflation, strong external trade fundamentals, and cautious but improving market sentiment that may encourage investment and credit flows across infrastructure and equity markets.
This article was curated and published as part of our South American energy market coverage.
