Financial market's inflation projections for Brazil in 2016 revised down
After being revised up for six consecutive weeks, the financial market's projection for this year's inflation as measured by the Broad National Consumer Price Index (IPCA) was slightly lowered from 7.29% to 7.27%. The inflation forecast for 2017 has also dropped from 5.50% to 5.43%. These projections are part of the Focus Market Readout, a weekly survey of financial institution's expectations carried out by the Central Bank and published on Mondays.
Despite the downward revision, the calculations are still far from the 4.5% inflation target. The upper target range is 6.5% this year and 6% in 2017. On June 28, Central Bank Governor Ilan Goldfajn said meeting the 4.5% target in 2017 was an ambitious and credible expectation.
“The year 2015 was one of shock and very high inflation, partly due to the sharp depreciation [of the Brazilian currency, the real], and high inflation of regulated prices. Since then, the purpose of the targeting system has been to bring it back to mid-target levels,” Goldfajn said.
The financial institution's forecast for the decline in Gross Domestic Product (GDP), the sum of all goods and services produced in the country, has been revised from 3.44% to 3.35% this year. For 2017, the forecast estimated growth has been maintained at 1% for three weeks.
The projection for the dollar exchange rate was revised from R$3.60 to R$3.46 at the end of 2016, and from R$3.80 to R$3.70, at the end of 2017.
Translated by Mayra Borges
Fonte: Financial market's inflation projections for Brazil in 2016 revised down
