November 29, 2022

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BC publishes Focus report again one month later, market already expects 7.65% inflation in 2022

BC publishes Focus report again one month later, market already expects 7.65% inflation in 2022

The central bank released its focus report again on Tuesday (26th), after nearly a month, and the market is already predicting that inflation will end the year at 7.65%. Four weeks ago, the estimate was that the IPCA for 2022 would be 6.86%.

As a result, the expectations of financial institutions for IPCA (Extended CPI) this year is already more than double the BC target, which is 3.5% with a 1.5 percentage point variance (ie: the target will be achieved if the index is between 2% to 5%).

. Prediction Broker economic inflation This year’s official report advanced for the 15th consecutive week, and the market also raised its 2023 and 2024 estimates (to 4% and 3.2%, respectively).

The forecast for the next two years is also higher than the target for the next two years (3.25% and 3.00%), a sign of disappointing expectations.

Market Outlook for 2022:

  • IPCA: Up from 6.86% 4 weeks ago to 7.65% now (15th week in a row)
  • Selic: Increase from 13.00% per annum to 13.25% (2nd consecutive increase)
  • Gross domestic product: Increase from 0.50% to 0.65% (4th consecutive increase)
  • dollar: Decrease from R$ 5.25 to R$ 5.00 (the fifth rise in a row)

Publications affected by the strike

Focus is a weekly survey that BC compiles with more than 100 financial institutions, and was last published on March 28. Since then, it has been suspended due to the organization’s servers’ strike.

The category is demanding a 27% salary adjustment, but it suspended the strike between April 20 and May 2. I managed to publish the Fox report This week and previous issues. on Friday (29), There will be a new council to decide whether to resume the strike.

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The report is usually published on Monday, with data provided by financial institutions as of the previous Friday. Prior to the three-week suspension, the server downtime delayed Focus’s deployment for two weeks in a row.

Selic forecast, GDP and exchange rate

According to Focus released today, the market is also expecting a rise in Selic and Gross Domestic Product (GDP) this year. It is estimated that the base rate of the Brazilian economy will end the year at 13.25% (versus 13% four weeks ago) and that the economy will grow by 0.65% (versus 0.5% in the last report).

Selic’s forecast remains the same for 2023, 2024 and 2025 (9.0%, 7.50%, and 7.00%, respectively), but GDP for 2023 has fallen from 1.30% to 1.00%. For 2024 and 2025, economic growth is estimated at 2.00%.

The exchange rate estimates declined at the end of this and the following three years ($1 = R$5.00 in 2022 and 2023, R$ 5.05 in 2024 and R$5.10 in 2025).

See below all forecasts from the Focus report released on April 22nd:

Indicator 2022 2023 2024 2025
IPCA 7.65% 4.00% 3.20% 3.00%
Selic 13.25% 9.00% 7.50% 7.00%
Gross domestic product 0.65% 1.00% 2.00% 2.00%
exchange 5.00 BRL 5.00 BRL 5.05 Brazilian Real 5.10 Brazilian Real

Previous Focus Reports

On Tuesday, the central bank also released data from Focus Reports for the past three weeks, which has not been published due to the civil servants’ strike. Check out all the numbers below:

IPCA forecast:

April 1 report:
2022: The drop went from 6.86% to 6.97%
2023: The drop was maintained at 3.80%.

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April 8 report:
2022: The drop went from 6.97% to 7.43%
2023: The drop went from 3.80% to 3.89%

April 15 report:
2022: The drop went from 7.43% to 7.46%
2023: Drop went from 3.89% to 3.91%

April 22 report:
2022: Drop went from 7.46% to 7.65%
2023: Drop went from 3.91% to 4%

Cilic predictions:

April 1 report:
2022: The drop was kept at 13%.
2023: The projection was kept at 9%.

April 8 report:
2022: The drop was kept at 13%.
2023: The projection was kept at 9%.

April 15 report:
2022: Drop went from 13% to 13.05%
2023: The projection was kept at 9%.

April 22 report:
2022: Drop went from 13.05% to 13.25%
2023: The projection was kept at 9%.

GDP forecast:

April 1 report:
2022: Drop went from 0.50% to 0.52%
2023: The drop was kept at 1.30%.

April 8 report:
2022: Drop went from 0.52% to 0.53%
2023: Drop went from 1.30% to 1.25%

April 15 report:
2022: Drop went from 0.53% to 0.56%
2023: Drop went from 1.25% to 1.12%

April 22 report:
2022: Drop went from 0.56% to 0.65%
2023: Drop went from 1.12% to 1%

Exchange rate forecast:

April 1 report:
2022: The offer went from 5.25 BRL to 5.20 BRL
2023: The drop was maintained at 5.20 BRL

April 8 report:
2022: The drop went from 5.20 BRL to 5.16 BRL
2023: The drop was maintained at 5.20 BRL

April 15 report:
2022: The drop went from 5.16 BRL to 5.10 BRL
2023: The offer went from 5.20 BRL to 5.15 BRL

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April 22 report:
2022: The offer went from 5.10 BRL to 5.00 BRL
2023: The offer went from 5.15 BRL to 5.00 BRL

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