Market predicts 1.99% inflation and 5.05% GDP drop in 2020

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The market again raised expectations for inflation this year amid renewed concerns about rising prices, while at the same time improving the outlook for the economy, according to the Focus survey released today by the Central Bank.

The weekly survey showed that the expectation for the IPCA to rise in 2020 is now 1.99%, against 1.94% in the previous week and a target of 4%, with a margin of tolerance of 1.5 percentage points more or less . It was the sixth consecutive week in which the projection increased.

The General Price Indices (IGP) have shown a sharp jump in wholesale prices, which worries the market in general, keeping an eye on the reaction of the BC, which will release the minutes of its last monetary policy meeting tomorrow.

For 2021, inflation expectations remained at 3.01%. For next year, the center of the official target is 3.75%, also with a margin of tolerance of 1.5 points.

For GDP (Gross Domestic Product), the consulted specialists started to forecast a 5.05% shrinkage this year, a decrease of 5.11% in the previous week. The outlook for growth of 3.5% in 2021 remains unchanged.

Regarding monetary policy, the Selic scenario continues at 2% this year and 2.5% in 2021. The Top-5, the group that most correctly forecasts, continues to see the basic interest rate at 2% at the end of both years.

Last week, the BC kept the Selic at the historic low of 2%, signaled maintenance for an extended period, but did not completely close the door on further monetary easing.

* With Reuters

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