Market sees greater inflationary pressure in 2023 and raises estimate for Selic to 11%

The market raised the outlook for inflation in 2023 for the 17th straight week and began to see a tighter monetary policy next year, on the eve of the Central Bank’s August meeting.

The Focus survey published this Monday (1st) by the monetary authority showed that the estimate for the rise in the IPCA in 2023 increased by 0.03 percentage point, to 5.33%, with the forecast for the increase in administered prices rising to 7.08%, 0.02 point higher than the previous week.

Given this scenario of pressured inflation and above the target ceiling, the estimate for the Selic at the end of 2023 rose to 11.00%, from 10.75% before.

These updates put more pressure on the BC days before the Copom (Monetary Policy Committee) decision, on Wednesday (3). The market expects a 0.5 percentage point increase in the basic interest rate for this meeting, currently at 13.25%.

The perspective in the Focus is that the Selic will park at 13.75% by the end of this year. The bill for inflation in 2022 fell for the fifth time in a row, to 7.15%, from 7.30% in the previous survey, thanks to the perspective now of 0.75% deflation in administered prices. The previous Focus pointed to a positive variation of 0.01% for these costs.

However, this is a result of the effects of the law that establishes a ceiling for ICMS rates on the fuel, gas, energy, communications and public transport sectors, which should not have a lasting impact.

The center of the official inflation target for 2022 is 3.5% and for 2023 it is 3.25%, always with a tolerance margin of 1.5 percentage points more or less.

The weekly survey, which captures the market’s perception of economic indicators, pointed out that the expectation of GDP (Gross Domestic Product) growth in 2022 improved by 0.04 percentage point, to 1.97%. But for 2023, there was a reduction of 0.09 point, to 0.40%.