Market raises inflation and GDP estimate in 2023

Despite federal government pressure on the BC to cut interest rates, expectations for the Selic rate have remained stable for the end of this year

BRASÍLIA – The inflation projection in 2023 has increased by Focus Bulletin issued by Central bank (BC) this Monday the 13th, and continues to drift away from the target. The projection for the HICP – official index of inflation – this year it went from 5.90% to 5.96%. For 2024, an increasingly relevant horizon for the BC’s inflation convergence strategy, the projection continued at 4.02% for the third week in a row.

Currently the focus of monetary policy is on the years 2023 and, with greater weight, on 2024. The median of the Focus for official inflation in 2023 is well above the target ceiling (4.75%), indicating three years of failure to comply with the core mandate of the CB, after 2021 and 2022. For 2024, the median is above the center of the target (3.00%), but still within the range from 1.50% to 4.50%.

Selico

Despite federal government pressure on the BC to cut interest rates, expectations for the Selic rate have remained stable for the end of 2023, 2024, 2025 and 2026.

The median base interest at the end of 2023 remained at 12.75% per annum, while for the end of 2024 it remained at 10%.

The projection for Selic to the end of 2025 has remained at 9%, the same median as it was four weeks ago. The bulletin also brought the projection for the Selic to the end of 2026, which remained at 8.75%, from 8.50% the previous month.

GDP

After the disclosure of Gross Domestic Product (GDP) of 2022 (2.9%) at the beginning of the month, the Market Report shows new progress in the economic growth scenario in 2023.

The median for GDP growth in 2023 increased from 0.85% to 0.89%. For 2024, the Focus Report showed stability in the GDP growth outlook at 1.50%, the same projection for 11 weeks.

Source: Terra

Rose

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