By Lise Alves, Senior Contributing Reporter
SÃO PAULO, BRAZIL – The latest report Focus Report by the Central Bank (Banco Central do Brasil, or BC) shows that analysts’ forecasts for 2015 inflation increased for the twelfth consecutive time, going from 10.38 percent to 10.44 percent. For 2016 forecasts also increased, remaining above the target limit of 6.5 percent. According to the BC inflation is now expected to fall within the target range only in 2017.
For the financial institutions surveyed by the BC, inflation in 2016 went from 6.64 percent to 6.70 percent. In the COPOM (Monetary Policy Committee) minutes report, released last Wednesday, the Central Bank stated that it will adopt the necessary measures to bring inflation down as much as possible to the center of the target, of 4.5 percent in 2016.
The COPOM’s minutes report was released after the committee decided to maintain the country’s benchmark interest rate at 14.25 percent per year.
The Focus Report also revealed that financial institutions not only increased the main inflation index (IPCA) but also increased other inflation indexes, such as the General Price Index – Domestic Availability (IGP-DI), the General Price Index – Market (IGP-M) and the Consumer Price Index from Fipe (IPC-Fipe). All these inflation indexes are forecast to close 2015 above the ten percent level.
Rising inflation also led analysts to forecast a retraction in the Brazilian economy for this year and for 2016. The forecast for the country’s GDP growth in 2015 went from a retraction of 3.19 percent to 3.50 percent this year and from a retraction of 2.04 percent to 2.31 percent in 2016.