Financial market raises inflation estimate to 5.74% in 2023

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Investors’ forecast exceeds the target ceiling set by the CMN for this year, which is up to 4.75%. A new estimate was released after President Lula said that the current inflation target hinders growth. Financial market economists raised their inflation estimate for this year from 5.48% to 5.74%. It was the seventh consecutive high of the indicator. The information is contained in the “Focus” report, released this Monday (27) by the Central Bank. More than 100 financial institutions were heard last week about the projections for the economy. Special g1: what is inflation Understand: how inflation affects your pocket For this year, the central inflation target was set at 3.25% by the National Monetary Council (CMN) and will be considered formally met if it oscillates between 1.75% and 4.75%. If confirmed, this will be the third year in a row that the inflation target has been breached, that is, in which the IPCA is above the ceiling set by the target system. In 2022, inflation amounted to 5.79%. The higher the inflation, the lower the purchasing power of people, especially those earning lower wages. This is because the prices of products increase without wages accompanying this growth. For 2024, the financial market’s inflation projection rose from 3.84% to 3.90% last week. The inflation target for next year, set by the National Monetary Council (CMN), is 3% and will be considered met if it fluctuates between 1.5% and 4.5%. Gross Domestic Product For Gross Domestic Product (GDP) growth in 2023, the financial market raised its forecast from 0.79% to 0.80%. GDP is the sum of all goods and services produced in the country. The indicator serves to measure the evolution of the economy. For 2024, the growth forecast remained stable at 1.5%. Interest rate The financial market maintained expectations for the economy’s basic interest rate, the Selic, stable at 12.50% per year for the end of 2023. Currently, the Selic rate is already at 13.75% per year. The Copom has also been signaling that interest rates will remain high for a longer period. As a result, the financial market continues to estimate a drop in interest rates this year. For the end of 2024, the market projection for the economy’s basic interest remained at 9.50% per year. Other estimates See below other financial market estimates, according to BC: Dollar: the projection for the exchange rate for the end of 2023 decreased from R$ 5.28 to R$ 5.25. By the end of 2024, it remained at R$5.30. Trade balance: for the balance of trade (result of total exports minus imports), the projection decreased from US$ 58 billion to US$ 57.6 billion in surplus in 2023. For 2024, the expectation for the positive balance continued at $52.4 billion. Foreign investment: the report forecast for the inflow of foreign direct investment in Brazil this year remained at US$ 80 billion inflow. For 2024, the inflow estimate rose from US$ 77.5 billion to US$ 80 billion. VIDEOS: economic news

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