Brazil’s financial market expects further interest rate cuts
The Brazilian financial market anticipates further reductions in the Selic base interest rate.
Forecasts for the end of 2023 have been adjusted from 12% to 11.75% and from 9.25% to 9% for the close of 2024.
This information is based on the Focus survey released by Brazil’s Central Bank.
This revision in the rate projection follows the Monetary Policy Committee’s (Copom) unexpected half-percentage point cut last week, adjusting the rate from 13.75% to 13.25%.
This move marked the first Selic rate cut in three years.
Additionally, Copom indicated another potential half-percentage point reduction in their upcoming September meeting.
Surveyed financial market analysts maintained their 2023 inflation rate prediction at 4.84% and slightly decreased their 2024 estimate from 3.89% to 3.88%.
Brazil’s official inflation targets for 2023 and 2024 are 3.25% and 3%, respectively, both with a 1.50% tolerance range.
Concurrently, GDP growth estimates for this year were adjusted from 2.24% to 2.26%, while the projection for next year remains at 1.30%.
The exchange rate forecast for the end of 2023 is set at 4.90 Brazilian reais per dollar and 5.00 reais per dollar for the end of 2024.
Projections for the trade balance (exports minus imports) are US$67 billion for 2023 and US$60 billion for 2024.
Direct foreign investment into Brazil is estimated at US$80 billion for both 2023 and 2024.
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This article was produced by The Rio Times’ automated newsroom system. How we use AI · Report an error · Editorial responsibility: Matthias Camenzind, Editor-in-Chief