Brasília – The Brazilian benchmark interest rate, aka the Selic rate, is likely to be raised by 0.5 percentage point to 14.75% per annum by the Central Bank’s Monetary Policy Committee (Copom), which convenes tomorrow (19) and on Wednesday (20). The current rate is 14.25% per annum. The forecast is from financial institutions polled weekly for the Focus Bulletin, issued this Monday (28).
For the end of 2016, the median estimate (whereby the outer ranges of projections are disregarded) for the Selic rate is 15.25% per annum. In 2017, the benchmark rate is expected to drop, closing at 12.88% per annum. Last week, the forecast had been 12.75% per annum.
For this year, financial institutions expect inflation to shoot past the target range highpoint, which is 6.5%. The forecast has changed for the third straight time, from 6.93% to 7%. Next year, inflation is expected to fall short of the highpoint of the target range, but still be far higher than the midpoint at 5.40%. The prior forecast had been 5.20%. The higher end of the target for 2017 is 6%, with the midpoint at 4.5% both this year and in the next.
Financial institutions expect the Gross Domestic Product (GDP) to shrink to 2.99% in 2016. For 2017, a rebound is expected with 1% growth. Last week’s forecast had been 0.86%.
*Translated by Gabriel Pomerancblum
