Itaú Adjusts Projections: Interest Rates to Continue Falling, but Inflation Outlook Remains

With the appointment of Diogo Guillen as chief economist, Banco Itaú Unibanco has revised its projections for interest rates in Brazil. The institution now forecasts that the Selic will be reduced further this year, reaching 13.75% by year-end. This change reflects a combination of factors, including the moderation of economic activity and deflationary pressures, although risks remain. According to Itaú’s projections, the Selic is expected to reach 12.5% by the end of 2027, indicating a gradual reduction in interest rates based on careful assessment of economic conditions and external scenarios. The inflation outlook was revised downward, with the IPCA projection for this year reduced from 5.4% to 5.1%. However, economists at the bank caution that the risk balance remains asymmetric, particularly regarding the impact of El Niño on inflation. Economic activity is also influenced by these considerations, with expectations of gradual improvements in market conditions. These projections reflect a more cautious and adaptive scenario where monetary policy aims to balance current demands with future challenges.