Credit Suisse increased its forecast for the basic interest rate, the Selic, at the end of this year to 12.75% this Wednesday (23), warning of “highly worrying” inflationary dynamics in Brazil.
Previously, the Swiss investment bank had expected interest rates — currently at 10.75% — to reach 12.25% by the end of 2022, after hikes of 1 percentage point in March and 0.5 point in May.
Now, in addition to these two increases, Credit Suisse expects an additional 0.5 point increase in June, which would end the monetary tightening cycle started in March last year, which took the Selic from an all-time low of 2%.
The private creditor’s review comes after the release, earlier this Wednesday, of this month’s IPCA-15 reading, which accelerated the rise to 0.99%, the highest monthly change for February since 2016 (+1.42%). . In 12 months, the index accumulated a jump of 10.76%.
The results were well above expectations in a Reuters poll for gains of 0.85% in the month and 10.60% in 12 months.
Solange Srour, chief economist at Credit Suisse in Brazil and columnist for sheetand Lucas Vilela, economist, said in a report that the upward surprise in the indicator “continues to show a highly worrying inflation dynamics in the country”.
The data indicate a “much more challenging” inflation outlook than the current projections of the Central Bank, which expects the IPCA to rise by 5.4% in 2022 and 3.2% in 2023, which justifies the increase in the estimate for the interest rate, Swiss bank experts said.
Credit Suisse maintained its forecast for the rise of the IPCA at the end of this year, at 6.2%.
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