Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Brazil's 2021 inflation outlook climbs to new high, above central bank target: survey

Published 02/22/2021, 07:39 AM
Updated 02/22/2021, 07:40 AM
© Reuters.

© Reuters.

BRASILIA (Reuters) - The outlook for Brazilian inflation this year rose for a seventh week and to a new high, a central bank survey of economists showed on Monday, while official interest rates are now expected to double by the end of the year.

The average forecast for IPCA consumer price inflation at the end of this year rose to 3.8% from 3.6%, according to the latest weekly 'FOCUS' survey of over 100 economists.

That is above the central bank's goal of 3.75%, with a margin of error of 1.5 percentage point on either side, and the highest 2021 forecast in the series.

The average inflation forecast over the next 12 months rose to 3.8% from 3.7%. The central bank's end-2022 goal is 3.50%.

A persistently weak exchange rate, strong global commodity prices, and growing concerns over the government's fiscal position are all pushing inflation expectations higher, and with it interest rate expectations.

The average forecast of the benchmark Selic rate at the end of this year rose to 4.00% from 3.75%, the survey showed, indicating that the market now expects the Selic rate to double this year from its current record low 2.00%.

Last month, the average end-2021 outlook was 3.25%. But the central bank dropped its forward guidance at its Jan. 19-20 policy meeting, citing inflation expectations rising close to target over the next couple of years.

Economists at Credit Suisse (SIX:CSGN) and Barclays (LON:BARC) expect the central bank to raise rates as early as next month.

The FOCUS survey also showed that economists expect the real to end this year at 5.05 per dollar, up from 5.01 per dollar last week. It is currently trading around 5.40 per dollar.

 

Latest comments

Brazil: Inflation= Indicator of (government mis-management and corruption). THINK ABOUT IT.
Brazil has it all under control, differently than the neighbours Argentina, Venezuela, Chile, Uruguay, Colombia etc....
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.