Central Bank: financial market estimates inflation at 10.05% this year
The financial market forecast for the Extended National Consumer Price Index (IPCA), considered to be the country's official inflation, decreased from 10.18% to 10.05 this year. This is the first reduction after 35 consecutive weeks of discharge.
The estimate is in the Focus Bulletin this Monday (13), a survey released weekly by the Central Bank (BC), in Brasília, with the institutions' expectations for the main economic indicators.
For 2022, the inflation estimate, by Focus , remained at 5.02%. For 2023, the forecast showed a reduction from 3.50% to 3.46%. In 2024 it registered a small change from 3.10% to 3.09%.
The forecast for 2021 is above the inflation target that should be pursued by the BC. The target, defined by the National Monetary Council (CMN), is 3.75% for this year, with a tolerance interval of 1.5 percentage points up or down. That is, the lower limit is 2.25% and the upper limit is 5.25%. For 2022 and 2023, the targets are 3.5% and 3.25%, respectively, also with a tolerance interval of 1.5 percentage points.
Interest rate
To reach the inflation target, the Central Bank uses as main instrument the basic interest rate, the Selic, set at 9.25% per year by the Monetary Policy Committee (Copom), at the last Copom meeting this year, held at last week.
By the end of 2022, the estimate is that the base rate will reach 11.50% per year (last week the estimate was 11.25%). And for 2023 and 2024, the forecast is for Selic at 8% per year and 7% per year, respectively.
When the Copom increases the basic interest rate, the purpose is to contain the heated demand, and this affects prices because higher interest rates make credit more expensive and stimulate savings. In addition, banks consider other factors when defining the interest charged to consumers, such as risk of default, profit and administrative expenses.
When the Copom reduces the Selic, the tendency is for credit to become cheaper, with incentives for production and consumption, reducing inflation control and stimulating economic activity.
GDP and exchange
The financial institutions consulted by the BC reduced the projection for the growth of the Brazilian economy this year from 4.71% to 4.65%. For 2022, the expectation for the Gross Domestic Product (GDP) - the sum of all goods and services produced in the country - is a growth of 0.50%. Last week, the expansion estimate was 0.51%. In 2023 and 2024, the financial market projects GDP growth of 1.90% and 2%, respectively.
Expectations for the dollar exchange rate for the end of this year rose from R$ 5.56 to R$ 5.59. For the end of 2022, the forecast remains at R$ 5.55.
Text translated using artificial intelligence.
