Market projects Selic at 13% in 2022, with a new high in inflation expectations

Economists’ expectations for the level of the basic interest rate at the end of this year reached 13%, showed the weekly Focus survey by the Central Bank this Monday (21), with inflation projections rising again for both 2022 and for 2023

The increase in the forecast for the Selic at the end of this year was the second in a row, compared to a rate of 12.75% estimated last week. The bill for 2023, meanwhile, rose for the third time in a row, at 9.0%, up from 8.75% in the previous reading.

This advance reflected the tenth straight upward adjustment in the forecast for the IPCA rise in 2022, to 6.59%, from 6.45% last week. At this level, projections indicate that inflation will strongly exceed this year’s official target of 3.5%, with a tolerance margin of plus or minus 1.5 percentage points.

There is also an expectation that the rise in prices will exceed the center of next year’s objective – of 3.25%, also with a margin of 1.5 points -, with economists projecting an increase of 3.75% in the IPCA in 2023. Last week, the estimate was at 3.70%. The coming year is considered to be of greater weight in the Central Bank’s relevant horizon.

The adjustments to market forecasts come in a context of growing global concern about inflation, as the Ukrainian war has boosted the price of various commodities, from oil to wheat, leading to expectations of tougher central banks around of the world.

Last week, the Central Bank’s Copom (Monetary Policy Committee) raised the Selic rate by 1 percentage point, to 11.75% per year, and indicated a similar dose of tightening for its next meeting. Investors expect to receive more clues about the autarchy’s next steps with the disclosure, on Tuesday, of the Copom minutes. In addition, on Thursday (24), the BC Quarterly Inflation Report will be released.

Given the rising expectations of inflation, which should weigh heavily on the pocket of Brazilian consumers this year and next, and the rise in the Selic rate, which tends to reduce spending, economists’ forecasts for GDP growth in 2023 were adjusted downwards, to 1.30%, compared to a rate of 1.43% forecast last week. For this year, the expectation of economic growth was up 0.01 percentage point, to 0.50%.

Delay in the disclosure of Focus by the Central Bank is a reflection of the strike of servers, says union

The release of the survey this Monday (21) was delayed due to the standard operation implemented by servers who ask for salary readjustments, informed the Sinal (National Union of Central Bank Employees). The publication of the survey, which is normally done at 8:25 am, took place exceptionally at 10:00 am. The BC did not provide the reasons for the change.

“Today’s delay in the Focus bulletin has to do with our mobilization. Other occurrences may be noticed in the coming days, but we cannot yet anticipate”, said the Sinal by means of a note.

Since last week, BC servers are doing daily outages between 2 pm and 6 pm. The group is also handing out coordination positions.

According to the union, a meeting that had been agreed with the president of BC, Roberto Campos Neto, was canceled and there is no forecast for the meeting. The entity also asks for a meeting with the Minister of the Civil House, Ciro Nogueira.

According to Sinal, if the government does not respond by this Tuesday, a proposal for an indefinite strike will be discussed.