For the second week in a row, on the eve of the Central Bank's (BC) Monetary Policy Committee (Copom) meeting, the financial market raised its estimate for the basic interest rate, the Selic. Analysts' forecast for interest rates, until the end of 2026, went from 13.5% per year to 13.75% per year. The information is in the Focus bulletin this Monday (16), a survey released weekly by the BC with the expectations of financial institutions for the main economic indicators. Related news: Financial market raises inflation forecast to 5.11% this year. INPC, inflation used to adjust salaries, amounts to 4.42% in 12 months. Financial market raises inflation forecast to 5.09% this year. For 2027 and 2028, the projection is that the Selic will be reduced to 12% per year and 10.25% per year, respectively. In 2029, the rate, which is the BC's main instrument for controlling inflation, should reach 10% per year. This week, the Copom holds a new meeting to decide on the Selic rate and the financial market forecast is that it will be maintained at 14.5% per year at this meeting. At the last meeting, in April, the board unanimously reduced the Selic by 0.25 percentage points, for the second time in a row, despite tensions surrounding the war in the Middle East. From June 2025 to March this year, the Selic remained at 15% per year, the highest level in almost 20 years. The Copom cut interest rates again in a scenario of falling inflation, however, the war in the Middle East impacted the country's economy, with rising fuel and food prices putting pressure on inflation. The Copom meeting takes place this Tuesday (16) and Wednesday (17). When the Selic Rate is reduced, the tendency is for credit to become cheaper, encouraging production and consumption, reducing control over inflation and stimulating economic activity. When Copom increases the Selic, the purpose is to contain heated demand, which has an impact on prices, because higher interest rates make credit more expensive and encourage savings. Therefore, higher rates can also make it difficult for the economy to expand. Banks also consider other factors when defining the interest charged to consumers, such as risk of default, profit and administrative expenses. Inflation The financial market forecast for the Broad National Consumer Price Index (IPCA), the official reference for inflation in the country, went from 5.11% to 5.3% this year. With the economic pressures of the war in the Middle East, the forecast for this year's IPCA was raised for the fourteenth week in a row, exceeding the target range that should be pursued by the BC. Established by the National Monetary Council (CMN), the target is 3%, with a tolerance interval of 1.5 percentage points. In other words, the lower limit is 1.5% and the upper limit is 4.5%. In May, food prices put pressure on official inflation, which closed at 0.58%. The IPCA accumulated over 12 months was 4.72%, according to the Brazilian Institute of Geography and Statistics (IBGE), already outside the inflation target ceiling. For 2027, the inflation projection increased from 4.03% to 4.1%. For 2028 and 2029, estimates are 3.68% and 3.5%, respectively. GDP and exchange rate In this edition of the Central Bank bulletin, financial institutions' estimate for the growth of the Brazilian economy this year went from 1.91% to 1.96%. For 2027, the projection for the Gross Domestic Product (GDP, the sum of goods and services produced in the country) remains at 1.7%. For 2028 and 2029, the financial market estimates GDP expansion at 2% for both years. In the first quarter of 2026, the country's economy grew ​1.1% compared to the last quarter of 2025. In the 12-month period, there was an expansion of 2%, according to the IBGE. In 2025, the Brazilian economy grew 2.3%, with expansion in all sectors, with emphasis on agriculture. The result represents the fifth consecutive year of growth. In this week's Focus, the dollar exchange rate forecast is R$5.20 for the end of this year. At the end of 2027, it is estimated that the North American currency will be R$5.25.