Recent upward revisions in analyst forecasts have anchored trader sentiment around 5.0-5.5% for Brazil’s 2026 IPCA inflation. The Central Bank’s Focus survey lifted its median projection to 4.99% by late September, while the Copom’s reference scenario points to 5.2% year-end, citing a tight labor market, de-anchored expectations, and potential second-round effects from oil prices and El Niño. These factors outweigh the Finance Ministry’s more optimistic 4.9% outlook and the recent slowdown in 12-month inflation to around 4.2-4.5%. With the Selic rate at 13.75% after multiple cuts and growth forecasts trimmed, markets price in a balance between easing monetary policy and persistent supply-side risks that could sustain readings near the upper end of the central bank’s tolerance band.