Focus: market raises inflation expectation to 5.90% – 02/27/2023 – Market

The market has once again adjusted upwards its inflation projections for this year and for the long term, showed the weekly Focus survey by the Central Bank this Monday (27).

Economists now expect the IPCA to rise 5.90% in 2023, against a rate of 5.89% estimated the previous week. This was the 11th consecutive increase in forecasts for high prices in Brazil for this year.

The IPCA advance forecast for 2024 remained unchanged at 4.02%, but the accounts for a longer horizon have risen again after recent pressure from President Luiz Inácio Lula da Silva for an increase in the official inflation target to be pursued by the Central Bank , which may raise fears of expectations being broken.

The analysts consulted now expect inflation to be 3.80% in 2025, against a rate of 3.78% estimated last week and 3.50% forecast four weeks ago. For 2026, the expectation changed to an advance of 3.75% for the IPCA, against 3.70% in the previous survey and 3.50% four weeks ago.

The center of the official target for inflation in 2023 is 3.25% and, for 2024 and 2025, it is 3.00%, always with a tolerance margin of plus or minus 1.5 percentage points.

Regarding the basic interest rate, analysts consulted by the BC maintained the perspective that the Selic will end this year at 12.75% and the next at 10.00%.

For the GDP (Gross Domestic Product), the growth estimate this year improved slightly for the second week in a row, at 0.84%, from 0.80% in the previous week. For 2024, it remains at 1.50% for the ninth week in a row.