The financial market again lowers its estimate for inflation in 2026, which fell to 5.03%. This is the fifth consecutive week of decline. The expectations are part of the "Focus Bulletin", released this Monday (3) by the Central Bank (BC), based on a survey carried out last week with more than 100 financial institutions. The market also began to predict a bigger interest rate cut this year (see below in this report). The drop in the inflation estimate occurs despite the resumption of the war in the Middle East, which raised the price of oil, with the potential to put pressure on Brazilian inflation (via the increase in fuel prices). ?? For 2026, the inflation estimate fell from 5.12% to 5.03%; ?? For 2027, the expectation remained at 4.22%; ?? For 2028, the forecast remained at 3.80%; ?? For 2029, the estimate remained stable at 3.50%. Since the beginning of 2025, with the adoption of the continuous target system, the objective has been to maintain inflation at 3%, being considered within the target if it varies between 1.50% and 4.50%. ? Why does this matter? The higher the inflation, the lower the purchasing power of the population — especially among those earning lower salaries. This occurs because prices rise, while wages do not follow this increase. Interest cut Even with the inflation estimate still above the central target in 2028 (an objective at which the BC is aiming to calibrate the interest rate), the financial market began to predict a greater reduction in interest rates during this year. Currently, the rate is 14.25% per year — after three cuts this year. The market estimate for the Selic rate at the end of 2026 fell from 14% to 13.75% per year last week, incorporating a final larger reduction in the rate this year. For the end of 2027, the market projection remained at 12% per year. For the end of 2028, analysts' estimates remained at 10.50% per year. Economic activity For the growth of the Gross Domestic Product (GDP) in 2026, the market estimate remained at 1.99%. Last year's official GDP result was an expansion of 2.3%, according to official release from the Brazilian Institute of Geography and Statistics (IBGE). ?? The Gross Domestic Product (GDP) is the sum of all goods and services produced in the country and serves to measure the performance of the economy. For 2027, the GDP growth projection fell from 1.60% to 1.57%. Exchange rate The financial market maintained its estimate for the exchange rate at the end of this year at R$5.20 per dollar. For the end of 2027, the projection of bank economists fell from R$5.29 to R$5.28 per dollar.