Probability that inflation in Brazil will be above target in 2023 is 57%, says Central Bank

The Central Bank (BC) said on Thursday (Dec. 15) that the probability of Brazilian inflation being above the target in 2023 is 57%.

The monetary authority’s current projections indicate that the annual rate will be 5% next year, above the permitted range of 2.75% to 4.75%.

The estimates were released in the Quarterly Inflation Report.

Brazil’s inflation target is 3.25% in 2023, but there is a tolerance of 1.5 percentage points, more or less.

The IPCA (National Wide Consumer Price Index) measures the country’s official inflation.

The monetary authority indicates that the rate will be above the target in 2022 of 3.5%. The tolerance is 3% to 5%, but the BC estimates indicate that it will end the year at 6%.

The president of the Central Bank, Roberto Campos Neto, will have to send a public letter explaining the reason for not meeting the inflation target.

According to the law that authorized the autonomy of the Central Bank, it is the central duty of the monetary authority to ensure the purchasing power of the population.

Campos Neto has already had to explain in 2021 when inflation reached 10.06%, and the target was 3.75%.

The president of the Central Bank justified that oil and energy put pressure on the price index. Read here the full text.

According to the Focus Bulletin, analysts interviewed by the Central Bank expect Brazil’s inflation to be 5.79% in 2022 and 5.08% in 2023.