Brazil's financial market revises down inflation forecast for 2016
Financial institutions surveyed by Brazil's Central Bank (BC) have revised their projection for this year's inflation as measured by the Broad National Consumer Price Index (IPCA) from 7.26% to 7.21%. The forecast for 2017 changed slightly from 5.30% to 5.29%. These estimates are part of the Focus Market Readout, a weekly report published on Mondays by the Central Bank with market forecasts for Brazil's main economic indicators.
The inflation forecasts for this and next year are above the 4.5% target set by the National Monetary Council which must be pursued by the Central Bank. The forecast for 2016 is also above the upper target range (6.5%).
Interest
The main instrument used by the Central Bank to control inflation is the benchmark interest rate (SELIC), which currently stands at 14.25% per annum. The financial market expects it to close out this year at 13% p.a. and 2017 at 11% p.a.
GDP, dollar rate
The projection for this year's Gross Domestic Product (GDP) has also been revised, with the expected decline changing from 3.25% to 3.27%. The expectation for 2017 has remained unchanged from last week (1.1% growth).
The dollar exchange rate is expected to close out this year at R$3.34 (forecast revised down from last week's R$3.39). For the end of 2017, the expected rate of R$3.50 has remained unchanged.
Translated by Mayra Borges
Fonte: Brazil's financial market revises down inflation forecast for 2016
