In a day marked by optimism in financial markets, the Brazilian real strengthened against the U.S. dollar, while the country’s main stock index, the Ibovespa, reached a new all-time high. The dollar closed down 0.62%, quoted at R$ 5.188 for sale—the lowest level since May 28, 2024, when it was traded at R$ 5.153. Meanwhile, the Ibovespa surged nearly 2%, closing at 186,241 points, surpassing its previous all time record of 185,674 points set last Tuesday.
The market’s positive performance was largely driven by comments from Gabriel Galípolo, president of Brazil’s Central Bank. Speaking at an event organized by the Brazilian Bankers Association (ABBC) in São Paulo, Galípolo described the current monetary policy environment as one of “calibration.” He emphasized that this is a moment to recognize improvements in the inflationary landscape amid an economic slowdown.
“This is the moment where the key word for this monetary policy cycle is ‘calibration,'”
– Galípolo
Analysts noted that the Ibovespa had been moving sideways, oscillating between 180,000 and 185,000 points over the past nine trading sessions. Bruna Sene, an equity analyst at Rico, explained that this lateral movement could be interpreted as a correction following recent strong gains. However, she added that the continued inflow of foreign capital is providing support to the index at these elevated levels.
Investors are now turning their attention to the upcoming release of Brazil’s official inflation data for January, which will be published tomorrow by the Brazilian Institute of Geography and Statistics (IBGE). In 2025, the National Consumer Price Index (IPCA) closed at 4.26%. According to the latest Focus Bulletin from the Central Bank, the median market projection for the IPCA in 2026 has fallen for the fifth consecutive week, now standing at 3.97%, down from 3.99% the previous week.
Despite the improving inflation outlook, the market’s expectations for the Selic, Brazil’s benchmark interest rate, remain unchanged. The Focus Bulletin shows the median projection for the Selic in 2026 at 12.25% per year, the same as in the prior week. For 2027, the median estimate is 10.50% per year. The Selic is currently at 15% per year, but the Central Bank has signaled in its latest Copom minutes that it intends to begin cutting rates starting in March.
Overall, the combination of a weaker dollar, a record-breaking stock market, and expectations of a more dovish monetary policy stance has buoyed investor sentiment in Brazil as the country navigates a period of economic transition.
Source: UOL
