Central Bank of Brazil reduces economic growth forecast
Through a statement, the financial institution said that for the fourth time it had to reduce this number that went from 2.17% to 1.99% in 2020
The Central Bank of Brazil reduced the forecast of growth of the Brazilian economy from 2.17% to 1.99% by 2020, which represents the fourth consecutive reduction of this projection, according to a statement.
Despite the reduction for this year, the bank maintains estimates of 2022 and 2023 at 2.5%. Regarding inflation, measured by the National Expanded Consumer Price Index (HICP), it will rise to 3.2%.
This figure represents a reduction in the inflation target defined by the National Monetary Council, which is 4% for this year. By 2021, the estimated inflation will remain at 3.75%, while for the next two years it will be 3.5% in each year, in line with the objectives set by the Brazilian government.
The Selic rate, reference for the country, is currently at 4.25%. In 2021, it is expected to increase at 5.5% by the end of the year. By the end of 2022 and 2023, the forecast remains at 6.5% per year.
When the Monetary Policy Committee (Copom) reduces the Selic rate, the trend causes credit to become cheaper, boosting incentives for production and consumption, since inflation control is reduced.
If, on the contrary, Copom increases the basic interest rate, higher interest rates are generated and savings are stimulated. The Brazilian bank’s maintenance forecast indicates that Copom considers that the above variations are sufficient to reach the inflation target.
K. Tovar
Source: dpa
