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Ibovespa registers 15th consecutive rise amid economic optimism.
The main index of the Brazilian stock exchange, Ibovespa, closed the last week higher, accumulating 15 consecutive records and reaching 157,739 points this Friday (14). The appreciation of 0.37% on the day reflects the optimism of investors with the slowdown in inflation in Brazil and expectations of cuts in the basic interest rate, the Selic.
Inflation slows and boosts the market.
Official inflation registered an increase of only 0.09% in October, the lowest rate for the month since 1998, resulting in an accumulated rate of 4.68% over the last 12 months, below the Central Bank's target ceiling (4.5%). This more benign scenario reinforces the prospect of a gradual reduction in the Selic rate, currently at 15%, which should be maintained for a prolonged period to ensure compliance with the inflation target.
Impact on the financial and exchange markets
In addition to the Ibovespa's performance, the dollar closed the week quoted at R$ 5.2967, showing a slight decrease of 0.02%, reflecting greater confidence in the Brazilian economy given the control of inflation and the prospect of lower interest rates. The General Price Index-10 (IGP-10) also registered a moderate increase of 0.18% in November, within market expectations.
Challenges to economic growth
Despite the positive outlook for the financial market, the Ministry of Finance has revised downwards its projection for Gross Domestic Product (GDP) growth in 2025, now estimated at 2.01% of the total growth period (TP3T), compared to the previously projected 2.31% of the TP3T. This adjustment reflects the cost of high interest rates to contain inflation, which remains above target, and slower growth expected for next year.
Outlook for 2026
For 2026, the financial market forecasts a drop in the Selic rate to 12.251p3t per year and more modest economic growth, in the range of 1.781p3t. The Central Bank maintains rigorous vigilance to balance the fight against inflation and the stimulus to growth, while the market closely follows the future decisions of the Monetary Policy Committee (Copom).
Photo by Vadim Shevyrin on Unsplash
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