Financial market reduces inflation estimate for 2023 and 2024

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Despite the drop, the projection for this year still exceeds the target ceiling set by the government, which is up to 4.75%. Numbers were released by the Central Bank this Monday (8). Financial market economists reduced inflation estimates for 2023 and 2024. This year, the projection dropped from 6.05% to 6.02%. The information is contained in the “Focus” report, released this Monday (8) 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 fluctuates between 1, 75% and 4.75%. If confirmed, this will be the third year in a row that the inflation target has been exceeded, 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 dropped from 4.18% to 4.16% last week. The inflation target for next year, defined by the National Monetary Council (CMN), is 3% and will be considered achieved if it oscillates between 1.5% and 4.5%. To define the basic interest rate and try to contain rising prices, the Central Bank is already aiming, at this moment, at the target for next year. This is because changes in the Selic rate take between six and 18 months to have a full impact on the economy. GDP For the Gross Domestic Product (GDP) growth of 2023, the financial market expectation was stable at 1% in the last week. GDP is the sum of all goods and services produced in the country. The indicator serves to measure the evolution of the economy. As for 2024, the growth forecast dropped from 1.41% to 1.40%. In early March, the Brazilian Institute of Geography and Statistics (IBGE) reported that GDP increased by 2.9% in 2022, against an increase of 5% in the previous year. Last week, the Ministry of Finance estimated a GDP expansion of 1.61% for 2023 and 2.34% for next year. Interest rate The financial market maintained its expectations for the economy’s basic interest rate, the Selic, at 12.50% per year for the end of 2023. Currently, the index is at 13.75% per year. For the end of 2024, the market projection for the economy’s basic interest remained stable, at 10% per year. As a result, the market continues to estimate a drop in interest rates next year as well. Other estimates See below other financial market estimates, according to BC: Dollar: the projection for the exchange rate for the end of 2023 was stable at R$ 5.20. By the end of 2024, it remained at R$5.25. Trade balance: for the balance of trade (result of total exports minus imports), the projection remained at US$ 60 billion in surplus in 2023. For 2024, the expectation for the positive balance increased from US$ 54.6 billion to $55 billion. Foreign investment: the report forecast for the inflow of foreign direct investment in Brazil this year remained at US$ 80 billion inflow. For 2024, the inflow estimate also continued at US$ 80 billion. VIDEOS: economic news

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