Market reduces inflation projection and predicts economic growth

The financial market reduced its inflation forecast for this year. According to the Focus bulletin, released today (6) by the Central Bank (BC), the Broad Consumer Price Index (IPCA) should be at 3.72%, a little less than last week’s projection of inflation of 3 .73%.

Focus brings forecasts from economists and market analysts consulted by the BC. For 2024, analysts also projected growth in the Gross Domestic Product (GDP) in relation to what was announced last week, when the estimate was for the increase to be 2.02%. Now the market projects greater growth, of 2.05%.

For 2025, the projection is that GDP will grow 2%. Index that repeats in 2026 and 2027.

The inflation estimate for 2024 is within the inflation target range that should be pursued by the BC. Defined by the National Monetary Council (CMN), the target is 3%, with a tolerance range of 1.5 percentage points up or down. In other words, the lower limit is 1.5% and the upper limit is 4.5%.

For 2025, the forecast is that inflation will remain at 3.64% and, in 2026, it will close at 3.5%, the same for 2027.

In relation to the economy’s basic interest rates, the market projected a Selic rate of 9.63%. Analysts believe that the reference for interest rates in the country should slow down the pace of decline, as four weeks ago the forecast was that the rate would close the year at 9%.

In the last two meetings, the cut in the Selic was 0.5 percentage points. But the BC’s Monetary Policy Committee (Copom) indicated that it may not repeat the same rate of cuts at the next meeting scheduled for May 7th and 8th.

When the Copom increases the basic interest rate, the purpose is to contain heated demand, and this has an impact on prices because higher interest rates make credit more expensive and encourage savings.

When the Copom reduces the Selic, the tendency is for credit to become cheaper, encouraging production and consumption, reducing control over inflation and stimulating economic activity.

For the financial market, Selic should end 2025, at 9%. The estimate for 2026 is that the basic rate will fall to 8.75% per year. For 2027, the forecast is 8.5%.

Exchange

According to Focus, in 2024, the dollar should close the year at R$5.00. Four weeks ago, the forecast was that the North American currency would be at R$4.95. For 2025, the projection is for an increase in the dollar, which should remain at R$5.05. For 2026, the forecast is that the exchange rate will close at R$5.10, the same for 2027.