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Financial market returns to reduce inflation projection in 2017

Focus Bulletin

Weekly survey released by the Central Bank reveals better forecasts for inflation and economic growth

For the seventh consecutive week, financial market economists have improved forecasts for inflation in Brazil. Analysts are now betting the Broad Consumer Price Index (IPCA) to end the year at 4.04%, compared to a previous forecast of 4.06%. For 2018, the scenario also improved, from 4.39% to 4.32%.

The information is part of the Focus Bulletin , a weekly publication that brings together the projections of about 100 analysts. The Central Bank is responsible for collecting and disseminating the data.

This scenario of low inflation will occur amidst a low interest rate and a resumption of economic growth. Faced with the economic reforms proposed by the federal government, the expectation is that the basic interest rate, the Selic, will end the year at 8.50%. For 2018, the projection is that the rate stays at the same level.

With the improvement in economic expectations, the Central Bank's board decided at the last meeting to reduce the Selic rate from 12.25% to  11.25% per year. The decision was followed by the announcement of lower interest rates offered by major financial institutions. 

More growth

In addition to the best cost-of-living scenario, analysts estimate that the economy will grow again this year. In 2017, the bet of the experts is that the Gross Domestic Product (GDP) advances 0.43%. A week ago, the estimate was a growth of 0.40%.

Source: Portal Brasil, with information from  the Central Bank