RIO DE JANEIRO, BRAZIL – Brazil’s 2022 inflation outlook rose above the Brazilian Central Bank’s official year-end goal for the first time, while the growth outlook for this year fell for a seventh consecutive week, a survey of economists showed on Monday.
The median forecast for 2022 inflation from over 100 economists in the Central Bank’s weekly “FOCUS” survey rose to 3.6% from 3.5%. The bank’s year-end goal is 3.5%, with a 1.5 percentage-point margin of error on either side.
Central Bank chief Roberto Campos Neto last week defended the bank’s planned strategy of raising interest rates aggressively at the start of the policy tightening cycle to avoid having to raise them too much in the end, and to keep 2022 inflation expectations in check.
“There is always a risk that short-term inflation starts contaminating the long end and that is why we decided to move more than the market expect(ed). Moving more has greater efficiency and in the end, we need to do less,” he said.
The 2021 median inflation forecast remained steady at 4.9%, still well above the central bank’s goal of 3.75%.
But as the COVID-19 pandemic and patchy vaccination process continue to sour consumer and business sentiment, the median economic growth forecast for this year slipped for a seventh week to 3% from 3.1%, the survey showed.
The Central Bank’s official forecast is for 3.6% growth this year. Year-end 2021 forecasts for the exchange rate also slipped for a fourth week running, to 5.40 reais per dollar from 5.37, the survey showed.