Market analysts reduce inflation estimates for 2023 and 2024

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Despite the drop, expected inflation for this year still exceeds the government’s target ceiling, which is 4.75%. Numbers were released this Monday by the Central Bank. Financial market economists again reduced the inflation forecast for this year, which dropped from 4.90% to 4.84%. The information is contained in the “Focus” report, released this Tuesday (31) by the Central Bank. The survey heard more than 100 financial institutions, last week, about the projections for the economy. Even with the decline in the market’s inflation estimate for 2023, it still exceeds the ceiling of the target set by the government, set at 3.25% by the National Monetary Council (CMN). The official inflation target will be considered formally met if the 12-month index fluctuates between 1.75% and 4.75%. Special g1: what is inflation Understand: how inflation affects your pocket If the financial market projection is 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 fixed ceiling for the government. 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 3.90% to 3.89%. 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. Inflation diffusion index in July is the lowest of the last three years Economy growth For this year’s GDP growth, the financial market projection remained stable at 2.24% 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. The increase in the projection occurs after the release of the GDP result for the first quarter, which pointed to expansion of 1.9% in comparison with the last three months of last year. The result was above economists’ expectations. As for 2024, the financial market growth forecast continued at 1.30%. Interest rate The financial market maintained expectations for the economy’s basic interest rate, the Selic, stable at 12% per year for the end of 2023. Currently, the index is at 13.75% per year. By the end of 2024, the market’s projection for the economy’s basic interest rate remained down from 9.5% to 9.25% per annum. 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 dropped from R$ 4.97 to R$ 4.91. By the end of 2024, it dropped from R$5.05 to R$5. Trade balance: for the trade balance (result of total exports minus imports), the projection dropped from US$67.6 billion for the US $66 billion in surplus in 2023. For 2024, the expectation for the positive balance remained at $60 billion. Foreign investment: the report forecast for the inflow of foreign direct investment in Brazil this year remained at US$ 80 billion inflow. For 2024, the inflow estimate was also stable at US$ 80 billion. VIDEOS: economic news

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