Brasília – Brazilian financial institutions polled by the Central Bank (BC) are expecting lower inflation this year and the next. The Focus Bulletin issued weekly by the BC shows that banks expect the Extended National Consumer Price Index (IPCA) to be 6.89% by the end of this year, in the sixth straight forecast revision. Last week’s estimate had been 7.01%. The estimate for 2017 changed down from 5.04% to 5%.
The contraction expected in Gross Domestic Product (GDP) worsened for the third consecutive time, from 3.19% to 3.22%. In 2017, expected GDP growth changed down from 1.30% to 1.23%.
As a result of recession and weaker inflation, the benchmark interest rate is seen ending 2017 at 13.50%. Last week, the BC’s Monetary Policy Committee slashed the per annum interest rate from 14.25% to 14%.
*Translated by Gabriel Pomerancblum
