Market forecasts higher inflation and devaluation of the Brazilian real against the dollar this year

Experts consulted have raised prices for the 21st consecutive week, reaching 7.27%. The dollar may reach BRL 5.15 by the end of the year

Market forecasts higher inflation and devaluation of the real against the dollar in Brazil this year
Photo: REUTERS/Rick Wilking
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The market raised its projections for inflation and the dollar this year, while it began to see lower economic growth, according to the Focus survey released by the Brazilian Central Bank on Monday 30.

The consulted experts raised their projections for price hikes in 2021 for the 21st consecutive week, reaching 7.27%, from 7.11% before. For 2022, the inflation index IPCA was estimated at 3.95%, from 3.93% before.

READ ALSO: Brazil’s Central Bank raises benchmark interest rate, its largest 100bp hike since 2003

The center of the official inflation target for 2021 is 3.75% and for 2022 it is 3.50%, always with a tolerance margin of 1.5 percentage points more or less.

At the same time, the estimate for the dollar at the end of this year rose to BRL 5.15, from BRL 5.10 the week before. For 2022 the estimate remained at 5.20 Brazilian reais.

READ ALSO: Brazilian business leaders, in letter, rebuke Bolsonaro’s ‘authoritarian adventures’

For the Gross Domestic Product (GDP), the estimate of growth in 2021 dropped by 0.05 percentage points, now calculated at 5.22%, while for 2022, the GDP expansion remained estimated at 2.00%.

The survey also showed that the market continues to calculate the basic interest rate Selic at 7.50% both at the end of 2021 and 2022.

(Translated by LABS)

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