Analysts start to see Brazil's benchmarking interest rates at 8.25% in 2023; forecast for this year's GDP improves

This means that the Brazilian market also sees inflation as a persistent obstacle to the country's growth.

Photo: REUTERS/Bruno Domingos
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Over 100 economists from different financial institutions began to see Brazil‘s benchmarking interest rate higher in 2023, while the estimate for inflation this year remained higher and the scenario for economic activity improved.

The Focus survey released by the Central Bank this Monday showed that the projection for the Selic (how Brazil’s benchmarking interest rate is called) at the end of this year remains at 12.25%, but for 2023 it rose to 8.25%, from 8.00% in the previous week.

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At the same time, the weekly survey pointed out that the expectation for the rise of the IPCA this year increased once again, by 0.05 percentage point, reaching 5.65%. For 2023, inflation continues to be calculated at 3.51%.

The center of the official inflation target for 2022 is 3.5%, and for 2023 it is 3.25%, always with a tolerance margin of 1.5 percentage points more or less.

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For Gross Domestic Product (GDP), this year’s growth estimate has improved, to 0.42%, from 0.30%, while that of 2023 remained at 1.5%.

The review comes in the wake of the announcement on Friday that Brazil‘s economy recovered in 2021 from the hit caused by the coronavirus pandemic with the highest annual growth in 11 years, of 4.6%. In the fourth quarter, the expansion was 0.5%, above expectations.

Translated by LABS

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