Brazil's financial institutions expect 7.04% inflation this year

The financial institutions' projection for this year's inflation as measured by the Broad National Consumer Price Index (IPCA) has been revised to 7.04% from 7%. The forecast for 2017 remained at 5.5%. The projections are part of Focus Market Readout, a weekly survey of financial market expectations carried out by the Central Bank.

The figures all exceed the inflation target set by the government (4.5%). The upper target range is 6.5% this year and 6% in 2017. The Central Bank is responsible for keeping inflation within target. One of the main instruments used for influencing economic activity and inflation is SELIC, the interest rate set by the Central Bank.

The financial market's forecast for the end-of-year SELIC rate in 2016 has been revised from 13% to 12.75% per annum. For the close of 2017, the expected rate went from 11.5% to 11.38% p.a. The current rate is 14.25% p.a.

The forecast for this year's GDP decline has also been slightly revised from 3.88% to 3.83%. For 2017, the expected growth forecast has been maintained at 0.50%.

Translated by Mayra Borges