XP reduces GDP projection to 0.3% in 2027; dollar goes to R$ 5.50 and Selic stays at 13.75%

XP Investimentos has lowered its 2027 Brazilian GDP growth projection to 0.3%, while forecasting the US dollar at R$ 5.50 and the Selic policy rate holding at 13.75%. The downgrade to growth is transmitted mainly through the monetary channel: a Selic held at a high level keeps the domestic rate differential wide, which restrains credit demand, investment and consumption while sustaining the carry appeal of Brazilian fixed income. A projected R$ 5.50 dollar points to continued currency weakness, feeding into import prices and inflation expectations, which in turn complicates any near-term easing and reinforces the case for a restrictive policy stance. Brazilian interest-rate futures and domestic cyclical equities, particularly credit-sensitive and consumer-facing names, are most exposed, since they depend on rate cuts and resilient household demand to reprice upward. Traders should watch the next Copom decision and its accompanying statement for guidance on the timing of any easing, alongside the monthly IPCA inflation print, which will indicate whether currency pass-through is lifting price expectations.

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