Brazil’s financial and regulatory environment saw significant shifts this week, driven by inflation data, central bank policy signals, and a major infrastructure announcement. Markets reacted sharply to new economic indicators and government commitments.
- IPCA inflation rose 0.78% in December, bringing 12-month rate to 4.11%
- Probability of a Selic rate hike in March now stands at 65%
- R$12.3 billion infrastructure plan announced for Northeast and Center-West regions
- Projects include BR-040 expansion and Belém-Brasília corridor modernization
- Bovespa index gained 2.3% over the week, real strengthened to R$5.03/USD
Brazil’s economy entered a period of heightened scrutiny as the latest inflation report revealed a 0.78% rise in the IPCA index for December, pushing the 12-month rate to 4.11%—slightly above the central bank’s target range. This data reinforced expectations of a tighter monetary policy stance in early 2026, with futures markets pricing in a 65% probability of a rate hike in March. The benchmark Selic rate currently stands at 10.25% annually. In a separate development, the Ministry of Infrastructure unveiled a R$12.3 billion investment plan to upgrade federal highways in the Northeast and Center-West regions. The initiative, backed by a mix of public funding and private concessions, aims to reduce logistics costs by an estimated 18% over the next five years. Key projects include the expansion of BR-040 and the modernization of the Belém-Brasília corridor, both expected to begin construction in Q2 2026. Financial markets responded with renewed confidence, as the Bovespa index rose 2.3% over the week, driven by gains in energy and construction stocks. The Brazilian real strengthened to R$5.03 per U.S. dollar, marking its best performance in three months. Investors cited the infrastructure plan and stable inflation trends as key factors supporting risk appetite.