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Stock market hits new record, but interest rates and inflation are a concern.
The Brazilian stock market hit a new record this week, surpassing 155,000 points on the Ibovespa index. The index has accumulated a gain of 29,08% by 2025, the largest since 2019, driven by shares of oil companies, mining companies, and banks.2.
Economic slowdown and persistent inflation
Despite optimism in the financial market, the Brazilian economy faces challenges. GDP growth slowed to 0.41% of the total GDP per quarter (TP3) in the second quarter, well below the 3.41% of the TP3 recorded in 2024.4. The accumulated inflation over 12 months remains above the target, at 5.17%, according to IBGE.4.
Central Bank keeps interest rates at 15%
The Central Bank has signaled that the Selic rate will remain at 1.5% for an extended period, contradicting the federal government. The decision aims to contain inflation, which is still above the tolerance ceiling (4.5%).3. Analysts expect the Selic rate to only start falling in 2026, to 12.25%.4.
Impacts for businesses and consumers
- High interest rates make credit more expensive and limit investment.
- Companies are facing difficulties adapting to the tax reform.
- Consumers are feeling the pressure on prices, especially with adjustments to their electricity bills.
New public procurement program
The government has launched the new phase of Contrata+Brasil, a digital platform that strengthens public procurement of food from family farming. The program has already generated R$8.3 million in revenue and has more than a thousand public bodies and 6,600 registered suppliers.5.
Photo by ORLANDO SANT'ANNA on Unsplash
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