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The consumption inflation is expected to remain at 3.69% this year, but is expected to reach 4.01% by 2019.
This is the forecast of the general consumer price index (IPCA) established by the financial institutions consulted weekly by the Central Bank (BC).
The Focus newsletter is published on Monday in Brasilia. Last week, the forecast for 2018 was also 3.69% and 4.03% for the following year.
Estimates are lower than the target center that British Columbia should aim for. For this year, the target center is 4.5%, with a lower limit of 3% and an upper limit of 6%.
To achieve the goal of inflation, the Central Bank uses the basic interest rate (Selic) as an instrument. According to the financial market, the Selic should end in 2019 at 7.13% per year (median expectations, which does not take into account the extremes of projections.)
Selic rate
). The previous forecast was 7.25% per year. The expectation is 8% per year for 2020 and 2021.
When the Monetary Policy Committee (Copom) raises the Selic, the goal is to contain the sharply rising demand, resulting in effects on prices because interest rates are higher.
When Copom reduces the Selic rate, credit tends to become cheaper, coupled with incentives for production and consumption, thus reducing the control of inflation. The maintenance of the basic interest rate indicates that Copom believes that previous amendments are sufficient to achieve the inflation target.
Economic Activity
Projections for the expansion of Gross Domestic Product (GDP) – the sum of all goods and services produced in the country – represent 1.3% this year and are pbaded from 2.53% to 2.55% in 2019. For 2020 and 2021, the estimate is 2.50%
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