Financial institutions forecast 7.36% inflation this year in Brazil

The forecast made by financial institutions for the inflation this year, as measured by the National Broad Consumer Price Index (IPCA), went from 7.34% to 7.36%. For 2017, the estimate was preserved at 5.12%. The predictions can be found in a survey conducted weekly by the Central Bank, published in the Focus Market Readout.

The projections are above the center of the 4.5% target set for inflation. Its upper limit stands at 6.5% for this year, and 6% for the next.

It is the job of the Central Bank to keep the inflation within the target. One of the tools to influence economic activity—and the inflation as a result—is the SELIC benchmark interest rate, which currently stands at 14.25% per annum.

Financial institutions predict the SELIC rate to stay at a yearly 13.75% at the end of 2016, and still forecast an 11% per annum at the end of 2017.

The gross domestic product (GDP) is predicted by financial institutions to fall this year, but the reduction is slightly smaller than what had been forecast the week before, going from 3.20% to 3.18%. For 2017, the expected growth remains at 1.3%.

The dollar rate for the end of 2016 was adjusted from R$3.26 to R$ 3.25. For 2017, the prediction remains at R$ 3.45.

Translated by Fabrício Ferreira