SAO PAULO (Reuters) – Private economists in Brazil have lowered their expectation for the country’s inflation index, with a new central bank survey on Monday showing they now forecast it to hit 5.80% at the end of this year.
The new median forecast comes down from 6.03% in the previous week and might ease some concern from policymakers, who have highlighted rising inflation expectations as one of the reasons for high interest rates in the country.
Finance Minister Fernando Haddad told reporters after the poll was released that market forecasts were now “in line” with projections from the ministry’s economic policy secretariat.
In the minutes of its May meeting, when Brazil’s benchmark interest rate was held at a cycle-high of 13.75%, the central bank expressed concerns about inflation expectations, saying it continued “to assess that de-anchored expectations raise the cost of bringing inflation back to the target”.
The South American country has an inflation target of 3.25% for 2023, which will be lowered to 3% in 2024.
According to Monday’s poll, private economists expect the official IPCA inflation index to hit 4.13% at the end of next year, slightly down from 4.15% in the previous week although still above targets.
The following are a set of estimates from the survey:
Market estimates 2023 2023 2024 2024
Median Now Previous Now Previous
week week
IPCA inflation index 5.80 6.03 4.13 4.15
(%)
GDP growth (%) 1.20 1.02 1.30 1.38
Brazilian real/U.S. 5.15 5.20 5.20 5.20
dollar (year-end)
Interest rate Selic 12.50 12.50 10.00 10.00
(year-end)
(Reporting by Luana Maria Benedito; Writing by Gabriel Araujo; Editing by Toby Chopra and Andrea Ricci)
