Inflation forecast for 2016 revised up to 7.26%
The financial institutions' forecast for inflation this year continues to go up. The outlook for the National Broad Consumer Price Index (IPCA) has been revised up for the fifth consecutive time, going from 7.23% to 7.26%. The estimate for 2017 has been on the increase for three straight weeks, with the latest revision changing it from 5.65% to 5.80%. These projections are part of the Focus Market Readout, a weekly publication released by the Central Bank (BC) based on insight from financial market analysts.
Inflation estimates are well above the 4.5% target, and should exceed the target ceiling of 6.5% this year. The upper target value for 2017 is 6%.
After the Central Bank's Monetary Policy Committee (COPOM) decided to keep the central bank rate (SELIC) at 14.25% per annum at its latest meeting, analysts have no longer expected the rate to rise in 2016. The median of expectations (discarding end values) for the close of 2016 dropped from 14.64% to 14.25% p.a. In 2017, the SELIC rate is expected to decrease and close out the year at 12.75% p.a. The rate is used for trading government securities under the Special System for Settlement and Custody (SELIC) and provides a benchmark for other interest rates in the market.
Financial institutions also expect further economic contraction in 2016. The forecast for Gross Domestic Product (GDP) growth was slightly adjusted from -3% to -3.01%. For 2017, an upturn is expected, with 0.7% economic growth, compared to the previous 0.8% forecast.
Industrial output should shrink 3.8% this year, compared to last week's 3.57% decline forecast. The sector is expected to recover in 2017, but the growth projection was maintained at 1.5%.
The year-end forecast for the dollar rate was revised from R$4.30 to R$4.35 for 2016, and remained stable at R$4.40 for 2017.
Translated by Mayra Borges
Fonte: Inflation forecast for 2016 revised up to 7.26%
