Fitch: Brazilian GDP loses strength in 2027 and Selic ends 2026 at 13.50% — whatever the result of the polls

Fitch's latest outlook projects that Brazilian GDP growth will lose momentum in 2027 and that the Selic policy rate will close 2026 at 13.50%, with the forecast held regardless of the outcome of the upcoming election polls. The rating agency's view implies that the central bank is expected to keep monetary policy restrictive for longer, given that a 13.50% year-end rate leaves limited room for easing even as activity slows. The transmission runs through the real rate differential: sustained high nominal Selic levels widen the carry advantage of local-currency fixed income against developed-market alternatives, supporting inflows into DI futures and Brazilian sovereign debt, while slower growth pressures corporate earnings and credit-sensitive equities. The most exposed instruments are the DI futures curve, where the 2026 and 2027 contracts price the expected path of the policy rate, and Brazilian equities in rate-sensitive sectors such as construction, retail and utilities. The next catalyst traders will watch is the Copom decision and accompanying statement, alongside the monthly IPCA inflation print, since either will indicate whether the central bank's guidance aligns

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