The April 25, 2026 Focus survey brought two simultaneous moves that rarely appear together in the same release: the inflation expectation for the year rose again — now to 4.80% — and this time the market did not wait for the Copom to act before revising the Selic. The median projection for the benchmark rate at year end jumped from 12.50% to 13.00%.
This combination deserves attention. In earlier Focus editions, the market had kept Selic projections steady even as IPCA rose — a sign that there was confidence external factors in exchange rates and energy prices would correct the picture on their own. This time, the consensus explicitly moved to pricing in that the central bank will need to tighten the screws.
The Sixth Consecutive Upward Revision
The 4.80% figure did not come out of nowhere. This was the sixth consecutive upward revision to the 2026 IPCA projection. Before detailing what changes with this number, it is worth documenting the recent history of these revisions.
| Focus Date | 2026 IPCA Projection |
|---|---|
| March 2026 (start) | ~4.20% |
| April 13 | 4.71% |
| April 20 | ~4.75% |
| April 25 | 4.80% |
Six weeks of one-directional upward movement indicates something more than short-term noise. The analysts contributing to the Focus — banks, asset managers, independent research firms — are systematically correcting projections that proved too optimistic at the start of the year. When the market revises in the same direction for six consecutive weeks, the signal is that the underlying trend has not yet reversed.
The critical threshold here is 4.50%. The official 2026 inflation target is 3.0% with a ±1.5 percentage point band, setting a ceiling at 4.50%. On April 13, the consensus breached that ceiling for the first time. Now, twelve days later, it is 30 basis points above it.
Why the Market Revised Selic to 13%
Until last week, the Selic projections for year-end 2026 held at 12.50% — implying the market still expected an additional 50 basis points of cuts beyond the current level, even with inflation above the target ceiling. That stance reflected a bet that external factors — lower oil prices following the U.S.-Iran ceasefire, an appreciated real — would provide organic disinflation, making a more forceful monetary policy response unnecessary.
The revision to 13.00% in the April 25 Focus represents the consensus abandoning that bet. There are at least three structural reasons for this.
The exchange rate did not hold. The real's strengthening below R$5.00 in mid-April was temporary. With the year-end exchange rate projection falling to R$5.30 in this Focus — down from the R$5.37 in the prior edition, but still at a level that implies depreciation against the dollar — the argument that the exchange rate would anchor inflation expectations has weakened.
Services inflation is sticky. Commodities and energy have external dynamics. Services inflation — healthcare, education, rent, personal services — responds primarily to domestic dynamics: the labor market, the level of economic activity, contractual inertia. This component has remained elevated regardless of what happens with oil or the exchange rate.
The credibility of the cutting cycle is at stake. The Copom began a monetary easing cycle with the highest Selic in the region. Continuing to cut with IPCA projected at 4.80% — 30 basis points above the target ceiling — requires the committee to present a convincing case that expectations will converge downward without additional monetary policy support. The market is saying it is not convinced.
What a 13% Year-End Selic Implies
Projecting a 13.00% Selic at year-end 2026 is a statement about the expected pace of the cycle. To understand what that means, it helps to start from where we are today.
The current Selic stands at 14.75%. If the market projects 13.00% by December, that is equivalent to expecting 175 basis points of cuts over the next eight months — roughly 25 basis points per Copom meeting, assuming each meeting results in a cut. An acceleration to 50 basis points per meeting would be incompatible with that projection, as it would take the Selic below 13.00% by September.
The practical implication is that the market is now anticipating a slower and more cautious cutting cycle than was being priced just two weeks ago. The next Copom meeting, scheduled for May 6–7, 2026, will be the first test of that hypothesis.
What the Copom Needs to Communicate in May
The May meeting arrives under triple pressure on the committee: inflation above the ceiling, unanchored expectations for six consecutive weeks, and a market that just revised the terminal Selic upward. The decision itself — how much to cut, whether to cut — matters less than the narrative that accompanies it.
There are three possibilities for the statement.
25 basis-point cut with a cautious tone. This would be read by the market as an implicit acknowledgment that the cycle will slow. Compatible with the projection of a 13.00% Selic at year-end. Not a surprise.
50 basis-point cut with defensive language. The committee maintains the pace but makes clear it is watching closely and can pump the brakes. The risk is that the market interprets this as inconsistency: why cut 50 basis points with inflation 30 basis points above the ceiling?
A pause in the cycle. Unlikely, but not dismissible if inflation data between now and the meeting surprises to the upside. Would be read as a strong hawkish signal, potentially forcing a sharp sell-off in longer-dated fixed income.
The Focus reading points to the first scenario as the consensus baseline. But baselines can shift quickly in Brazil when six weeks of revisions are pulling in the same direction.
How This Affects Different Asset Classes
Fixed-rate bonds. With the Selic projection rising from 12.50% to 13.00%, medium- and long-duration pre-fixed securities suffered negative mark-to-market. Anyone carrying Tesouro Prefixado with 2028 or 2029 maturities, assuming the prior cutting pace would continue, now sees a lower unit price in the portfolio. Pre-fixed exposure has become riskier in this cycle.
Tesouro IPCA+. The dynamics here are more favorable. With IPCA projected at 4.80% — and with upward revision risk still present — the inflation-linked component of IPCA+ bonds works in the investor's favor. The challenge is the real yield component: if nominal interest rates rise due to higher inflation, the required real premium also tends to rise, compressing prices on longer bonds. In the near term, IPCA+ offers better protection than pre-fixed.
Real estate investment funds (FIIs) and rate-sensitive equities. Paper FIIs with IPCA-indexed portfolios are relatively protected, but brick-and-mortar FIIs and homebuilder stocks suffer from the prospect of higher rates for longer. The same applies to utilities and concession companies, whose valuations depend on lower discount rates.
Exchange rate. The year-end dollar projection of R$5.30 — down from the prior projection of R$5.37 — suggests the market sees some support for the real. Higher nominal rates for longer can attract carry-trade flows. But this depends on the global context: if appetite for emerging-market risk deteriorates, R$5.30 quickly becomes R$5.50.
The Trap of Delayed Diagnosis
There is something important to name about the pattern of six consecutive revisions: it indicates that the projections built at the start of the year rested on assumptions the market has been forced to abandon gradually. This is not a criticism of analysts — macroeconomic forecasting is genuinely difficult — but it is a reminder about the cost of building positions based on projections that have not yet incorporated available information.
When the Focus was projecting IPCA at 4.20% in March, the exchange rate had already depreciated, energy prices had already risen, and services inflation was already showing signs of stickiness. The market revised with a lag. Those who positioned their portfolios betting on fast Selic cuts based on the March numbers now face negative mark-to-market.
The point is not that the Focus is "wrong" — it is that projections are estimates and should be treated as such. Six upward revisions say that the starting point was too optimistic. They do not say how many more revisions are still to come.
What to Watch in the Weeks Ahead
Before the May Copom meeting, three data points matter more than any others.
IPCA-15 for April (or May). The preview inflation index will indicate whether the upside momentum continued after the Focus collection period closed. A reading above 0.50% month-on-month would be a warning sign.
Exchange rate. The difference between R$5.10 and R$5.40 on the day of the Copom meeting is substantive. A weaker real increases inflationary pressure through imports; a stronger real gives the committee room to maintain a more neutral tone.
Copom April minutes. Published before the May meeting, the minutes from the April 28–29 meeting will reveal how the committee is framing the problem of above-ceiling inflation. If the minutes explicitly cite the risk of unanchored expectations as a priority concern, the market will interpret that as preparation for a more hawkish stance in May.
The narrative from the April 25 Focus is clear: the market is no longer willing to wait for external conditions to solve the inflation problem on their own. A 13% Selic at year-end is the new consensus, and it implies that the cutting path will be slower than it appeared two weeks ago.
At Royal Binary, we track weekly macro data — including every Focus edition — as part of our market conditions monitoring process. Not because macro determines every trade, but because the Selic trajectory affects liquidity, volatility, and correlations between assets. If you want to understand how we operate in this context, discover the platform.