Brazilian real strengthens as US CPI dip lowers dollar and Focus inflation forecast to 5.16%
U.S. consumer‑price data for June showed a 0.4% monthly decline, well below expectations. The surprise eased expectations that the Federal Reserve will raise rates soon, prompting the dollar to slip below R$5.10 for the first time in a month and trade around R$5.07‑5.08. The weaker dollar helped Brazil’s B3 index, the Ibovespa, rise 0.51% to 176,641 points.
At the same time, the Central Bank of Brazil’s Focus bulletin cut its 2026 inflation projection for the IPCA to 5.16% from 5.30%. Other forecasts remained unchanged: 2026 GDP growth 1.99%, the Selic rate held at 14% (current 14.25%), and the average 2026 dollar rate expected at R$5.20. The lower inflation outlook and softer dollar expectations lifted market sentiment and revived expectations of a Selic cut later in the year.
Oil prices also rose, with Brent reaching about US$84.7 a barrel, as renewed tension between the United States and Iran kept supply concerns high. The combination of easing U.S. inflation, a falling dollar, and a more benign Brazilian inflation outlook drove the positive market move.