Brazil: Fixed-rate vs. inflation-linked loan options

Financial experts highlight the differences between fixed-rate and inflation-linked loans in Brazil. For long-term credit, choosing between a rate tied to the IPCA (Consumer Price Index) or a fixed rate can significantly impact budget predictability.

In an IPCA-linked loan, the cost of credit evolves alongside inflation. Conversely, a fixed-rate loan establishes the interest percentage at the time of contracting, shielding the borrower from future inflationary fluctuations. This distinction is particularly relevant during periods of economic uncertainty. According to Central Bank Focus Bulletin projections, inflation for 2026 is estimated at 4.99%, which is above the target ceiling of 4.5%.