Market sees inflation at 6.07% and raises GDP forecast to 5.18% in 2021 – Prime Time Zone


Central Bank sources revise the estimate for the IPCA for the 13th week in a row; expectation for the dollar falls to R$ 5.04

Marcello Casal Jr/Agência BrasilSources consulted by the Central Bank reject inflation forecast from the 2021 target ceiling

O financial market raised the prospects for the inflation and the resumption of the Brazilian economy in 2021, while reducing the expectation of the price of the real ante or dollar, according to data released by Focus Bulletin this Monday, 5. The median of the Central Bank survey carried out with more than 100 financial institutions pointed to an increase of 6.07% of the Broad Consumer Price Index (IPCA), the official indicator of Brazilian inflation. This is the 13th week in a row that the forecast has changed upwards. In the last edition, estimates indicated an increase of 5.97%, against 5.44% a month ago. The BC pursues the inflation target of 3.75%, with a margin of 1.5 percentage points up or down, that is, between 2.25% and 5.25%. The IPCA-15, considered the preview of inflation, was 0.83% in June and accumulated an increase of 8.13% in the last 12 months. The full value of last month’s IPCA will be released by the Brazilian Institute of Geography and Statistics (IBGE) this Thursday, 8. The expectation for inflation in 2022 suffered a slight drop, from 3.78% to 3.77%. The target for the IPCA next year is 3.50%, with a variation between 2% and 5%.

The forecast for the Gross Domestic Product (GDP) was revised from 5.05% to 5.18% in the 11th week followed by change. A month ago, the expectation was for an advance of 4.36%. BC sources also reduced the expectation of economic performance in 2022 to growth of 2.11%, compared to 2.10% in the previous week. The perspective for the Selic was maintained at 6.50% per year, the same estimate as last week and above the projection of 5.75% a month ago. The monetary authority raised the basic interest rate to 4.25% in June and signaled a new increase of 0.75 percentage points in August, raising the Selic rate to 5% per year. In a statement, the BC “left the door open” for a more incisive high, estimated by analysts at 1 percentage point. The estimate for the exchange rate was reduced to R$ 5.04, against R$ 5.10 last week, and R$ 5.30 a month ago. The dollar was once again quoted above R$5 last Thursday, 1st, after spending more than a week at R$4.90. The North American currency operates in high this Monday, traded in the range of R$ 5.07.