RIO DE JANEIRO, BRAZIL – Brazil’s central bank weekly FOCUS survey of some 100 economists and financial institutions indicated that the outlook for inflation in the country rose for the fifth consecutive week, and is getting closer to the bank’s target for the year.
The average forecast for IPCA consumer price inflation at the end of the year (2021) rose to 3.60% from 3.50% the week before, according to the latest weekly ‘FOCUS’ survey.
That’s the highest since last March, and close to the central bank’s end-year goal of 3.75%, with a margin of error of 1.5 percentage point in either direction.
Inflation in Brazil, led by a spike in food prices, has proved to be less “transitory” than the Central Bank had thought. It ended last year at 4.5%, above the bank’s median target of 4.00%.
With inflation expectations converging towards target over the next two years, the bank in January ditched its forward guidance outlook after only five months. Markets then brought forward forecasts for the first interest rate hike since 2015.
For two weeks thereafter, the FOCUS survey showed that economists’ average end-2021 and end-2022 rate forecasts were unchanged at 3.50% and 5.00%, respectively; the latest survey has now changed the prospects.