On the wrong side

BRAZIL ECONOMICS - Report 26 May 2026 by Alexandre Schwartsman, Cristina Pinotti and Diego Brandao

At the beginning of the month, the federal government announced Novo Desenrola Brasil, a program aimed at household debt restructuring through discounts and lower interest rates. The program, however, is not isolated and is now part of a broader set of measures intended to stimulate consumption through the credit channel. According to our estimates, the announced measures that directly affect the credit market should add approximately BRL 184 billion to the economy’s stock of credit in 2026, which would represent an additional impulse of close to 1.35% of GDP.

In the context of the current monetary tightening cycle, which assumes a slowdown in economic activity, the unclogging of the credit channel becomes particularly relevant. With this in mind, we estimate the effects of an exogenous shock to the credit impulse for households on core inflation and the ex-ante real Selic. The results suggest that, considering the estimated additional impulse for 2026, the credit shock may raise core inflation by approximately 0.40 p.p. and the real interest rate by around 0.70 p.p. over a 12-month horizon.

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