Market reduces Brazil’s inflation projection for 2022, 2023 and 2024

The median of the projections of market economists for the Brazilian official inflation for 2022 fell again for the 16th week in a row, from 5.71% to 5.62%, according to the Focus Report, from the Central Bank (BC), released today with estimates collected until last Friday.

For 2023, the median of expectations for the National Wide Consumer Price Index (IPCA) also dropped, from 5.00% to 4.97%.

For 2024, it was from 3.47% to 3.43%.

SELIC

For the basic interest rate (Selic), the median of the estimates remained at 13.75% for the end of this year, 11.25% for 2023, and 8.00% for 2024.

In its last meeting, in September, the Central Bank’s Monetary Policy Committee (Copom) interrupted the longest cycle of interest rate hikes in the country since 1999 by maintaining the Selic rate at 13.75% per year but said it “will not hesitate” to raise rates again if inflation does not drop as expected.

The next meeting of the collegiate takes place on Oct. 25 and 26.

The inflation target pursued by the Central Bank is 3.50% in 2022, 3.25% in 2023 and 3.00% in 2024, always with a margin of 1.5 percentage points above or below.

GDP

The median of the market’s projections for the growth of the Brazilian economy in 2022 went up again, from 2.70% to 2.71%.

For 2023, the median expectation for Gross Domestic Product (GDP) expansion was raised from 0.54% to 0.59%. For 2024, it remained at 1.70%.

The Brazilian economy grew 1.2% in the second quarter, reported the Brazilian Institute of Geography and Statistics (IBGE) in early September, exceeding the 0.9% of the median of economists heard by Valor.

GDP for the third quarter will be released on Dec. 1st.

DOLLAR

The median of the estimates for the dollar at the end of this year was maintained at R$5.20.

For 2023, the median of estimates for the American currency also remained at R$5.20 from one week to the next.

For 2024, it dropped from R$5.11 to R$5.10.