Brasília – The projection of financial institutions for the growth of the Gross Domestic Product (GDP), i.e. the sum of all goods and services produced in the country, has been revised up from 1.63% to 1.65% for 2014. For 2015, the projection remains at 2%, as per a poll of Brazilian banks conducted by the Central Bank.
The projection for inflation has also continued to increase. The Broad Consumer Price Index (IPCA) is expected to be at 6.47% by the end of 2014, close to the top end of the inflation target, which is 6.50%. This has been the sixth straight increase in the estimate, which is released weekly.
Whenever the Central Bank believes inflation is on the way up, it raises the benchmark interest rate, aka Selic rate, which is currently at 11% per annum. Brazilian banks believe that by the end of 2014, the Selic will be at 11.25% per annum, a projection that has been maintained for three consecutive weeks. By the end of 2015, the rate is expected to be 12% per annum, and has remained so for nine weeks.
The exchange rate is expected to be R$ 2.45 for US$ 1 by the end of 2014. The projection for late 2015 has gone from R$ 2.55 to R$ 2.53 for US$ 1.
*Translated by Gabriel Pomerancblum
