Financial market reduces inflation estimate for 2023 and increases for next year

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Market economists also began to predict a smaller cut in the basic interest rate next year. Numbers were released this Monday (30) by the BC. Financial market economists reduced inflation expectations in 2023, which went from 4.65% to 4.63%. The information is contained in the “Focus” report, released this Monday (30) by the Central Bank. The survey heard from more than 100 financial institutions last week about projections for the economy. With the drop, analysts’ estimates for 2023 inflation continued to be below the target ceiling defined by the National Monetary Council (CMN). The central inflation target is 3.25% this year, and will be considered formally met if the index oscillates between 1.75% and 4.75% this year. The last time that the market’s inflation expectations were within the targets set for this year was on June 15, 2022 (4.73%). The decline in the market’s inflation estimate for this year occurred after the release of the official inflation result for September, which totaled 0.26% and was, once again, below analysts’ projections. If the financial market’s projection is confirmed, a two-year sequence of non-compliance with the inflation target will be interrupted. In 2021, the IPCA totaled 10.06%. And, in 2022, inflation totaled 5.79%. Special g1: what is inflation Understand: how inflation affects your pocket For 2024, the inflation estimate rose from 3.87% to 3.90% in the last week. Next year, the inflation target is 3% and will be considered met if it fluctuates between 1.5% and 4.5%. To define the basic interest rate and try to contain the rise in prices, the BC is currently targeting next year’s target. The higher the inflation, the lower people’s purchasing power, especially those who receive lower salaries. This is because the prices of products increase, without wages keeping up with this growth. Gross Domestic Product Regarding the result of the Gross Domestic Product (GDP) for 2023, the financial market reduced the growth forecast from 2.90% to 2.89%. 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 financial market’s economic growth forecast remained unchanged at 1.50%. The forecast of greater economic growth comes after the announcement that the Gross Domestic Product (GDP) in the second quarter of this year increased by 0.9%, well above analysts’ expectations. Interest rate Financial market economists maintained their estimates for the basic interest rate of the Brazilian economy for the end of this year and 2024. Currently, the Selic rate is at 12.75% per year, after two consecutive reductions promoted by the Bank Central. For the end of 2023, the financial market maintained its projection for the Selic rate at 11.75% per year. For the end of 2024, the market projection for the economy’s basic interest rate rose from 9% to 9.25% per year. As a result, analysts began to predict a smaller interest rate cut in 2024. Other estimates See below other estimates from the financial market, according to the BC: Dollar: the projection for the exchange rate for the end of 2023 remained stable at R$5 For the end of 2024, the estimate remained at R$5.05. Trade balance: for the trade balance balance (result of total exports minus imports), the projection rose from R$74.4 billion to a US$75 billion surplus in 2023. For 2024, the expectation for the positive balance fell from US$61.8 billion to US$60.6 billion. Foreign investment: the report’s forecast for the entry of foreign direct investment into Brazil this year fell from US$79.4 billion to US$72 billion. For 2024, the estimated inflow was also stable at US$80 billion. VIDEOS: economic news

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