Brazilian market analysts now forecast inflation of 8.35% this year – Focus report
RIO DE JANEIRO, BRAZIL – The Focus report released on Monday, September 20, brings a general worsening of some of the leading economic indicators. In just one week, the projections for the IPCA inflation this year went from 8% to 8.35% — for 2022, the expectation now is for inflation of 4.10%. The previous forecast was 4.03%.
The increase in the price of electricity due to the water crisis and the rise of commodities in the international market are among the key factors that account for the revision of market agents’ expectations.
With new projections for inflationary pressure, the market also expects a more significant adjustment to the benchmark Selic rate. Economists heard by the Central Bank’s Focus bulletin are now projecting an 8.25% rate against 8% a week ago. Next year, the interest rate should rise to 8.5%, according to market expectations.
Inflation is also increasingly distant from the target set by the Central Bank, of 3.75% for this year, with a tolerance interval of 1.5 percentage points (p.p) up or down and 3.5% for 2022. The president of the Central Bank, Roberto Campos Neto, has said he will do whatever is necessary to bring inflation to the target.
“The worsening of inflation for 2022 is the worst signal for Selic expectations,” says André Perfeito, chief economist at Necton Investimentos. “We are talking about inflation in the general index of 18.21% on the median of economists for this year. We can only imagine the impact of this next year, and it shouldn’t be small.”
In two days, on Super Wednesday, 22nd, the Copom is expected to announce an increase in the introductory interest rate, which should rise from 5.25% to 6.25% per year. On the same day, the U.S. Federal Reserve releases its monetary policy decision. The expectation is that it will give the green light for the beginning of reducing the purchase of assets. “With this, the dollar should suffer greater pressure,” says Perfeito.
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| Instrument | Last | Change | YoY | Prev. | High | Low | Volume |
|---|---|---|---|---|---|---|---|
| IBOV | 172,236.05 | +2.22% | +10.94% | 168,498.45 | — | — | — |
| USD/BRL | 5.51 | +0.05% | +3.38% | 5.51 | 5.52 | 5.51 | — |
| SELIC | 13.75% | — | — | — | — | — | |
| PETR4 | 45.19 | -0.24% | +39.65% | 45.30 | 45.39 | 44.29 | 40,897,000 |
| VALE3 | 66.11 | +3.23% | +1.38% | 64.04 | 66.30 | 64.74 | 20,259,100 |
| ITUB4 | 41.72 | +2.94% | +6.26% | 40.53 | 41.79 | 40.89 | 17,762,100 |
| BBDC4 | 14.68 | +3.38% | -23.06% | 14.20 | 14.68 | 14.34 | 39,079,800 |
| BBAS3 | 17.02 | -0.64% | -25.29% | 17.13 | 17.39 | 16.73 | 41,431,000 |
| B3SA3 | 14.85 | +3.20% | +13.19% | 14.39 | 14.93 | 14.32 | 27,051,000 |
| ABEV3 | 15.61 | +0.84% | +18.44% | 15.48 | 15.68 | 15.38 | 27,548,800 |
| WEGE3 | 50.74 | +5.29% | +11.84% | 48.19 | 50.87 | 48.26 | 16,073,900 |
| PRIO3 | 59.39 | -1.80% | +51.39% | 60.48 | 59.57 | 56.90 | 10,987,900 |
| SUZB3 | 54.20 | +1.50% | +16.06% | 53.40 | 54.32 | 52.30 | 10,985,300 |
| RENT3 | 30.83 | +1.78% | -26.72% | 30.29 | 30.96 | 30.00 | 11,812,400 |
| AZZA3 | 15.12 | +2.44% | -46.31% | 14.76 | 15.32 | 14.84 | 2,774,100 |
| CSNA3 | 4.49 | +1.81% | -45.84% | 4.41 | 4.79 | 4.41 | 32,453,700 |
| GGBR4 | 25.26 | +4.60% | +32.25% | 24.15 | 25.30 | 24.17 | 24,250,400 |
| ENEV3 | 27.40 | +2.09% | +41.60% | 26.84 | 27.62 | 26.90 | 8,949,100 |
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