Brasília – Brazilian financial institutions revised down their inflation forecast for this year, gauged by the consumer price index Índice Nacional de Preços ao Consumidor Amplo (IPCA), from 7.14% to 7.08%, for the sixth straight time. For 2017, the estimate dropped from 5.95% to 5.93%, the second consecutive downward revision. The estimates are from the Focus Bulletin issued this Monday (18th) by the Brazilian Central Bank (BC), based on projections from financial institutions concerning the major economic indicators.
The GDP shrinkage forecast for this year changed for the 13th straight time, this time from 3.77% to 3.80%. The 2017 GDP growth forecast was revised from 0.30% to 0.20%.
Amid a scenario of recession, financial institutions expect the Central Bank to lower the benchmark interest rate (aka the Selic rate) this year. The median of forecasts for the end of 2016 (which disregards the highest and lowest ends of the range) moved from 13.75% to 13.38% per annum. The Selic currently stands at 14.25% per annum. At the end of 2017, the rate is seen at 12.25% per annum. The US dollar price forecast changed from BRL 4 to BRL 3.80 by the end of 2016 and from BRL 4.10 to BRL 4 in 2017.
*Translated by Gabriel Pomerancblum
