The market has lowered its forecast for the Selic rate to 9,50% this year.
Economists consulted by the Central Bank's Focus survey now expect a lower benchmark interest rate, but without improving their views on economic activity; projections for the IPCA inflation rate in 2017 fell to 4,71%, compared to 4,80% previously, marking the third consecutive week of decline; estimates for 2018 remained at 4,50%.
SAO PAULO (Reuters) - Amid a widespread drop in inflation projections for this year, economists consulted in the Central Bank's Focus survey now see the benchmark interest rate even lower, but without improving their views on economic activity.
The survey, released this Monday, showed that the expectation is that the Selic rate will end 2017 at 9,50 percent this year, compared to 9,75 percent previously. For 2018, the trend was the same, with calculations indicating a rate of 9,38 percent, compared to 9,50 percent.
The February meeting of the Monetary Policy Committee (Copom) is expected to result in a 0,75 percentage point cut in the benchmark interest rate, currently at 13 percent, maintaining the pace adopted by the Central Bank this month, according to the Focus survey. Previously, projections were for a 0,50 percentage point cut.
Last week, the president of the Central Bank, Ilan Goldfajn, stated that the monetary authority had entered a new phase of interest rate cuts. According to the minutes of the Monetary Policy Committee (Copom), opting for a stronger reduction would help the economic activity, which is currently in recession, amidst a scenario of more widespread disinflation.
The Focus report also showed that projections for the IPCA inflation rate in 2017 fell to 4,71 percent according to the median, compared to the 4,80 percent expected until then, marking the third consecutive week of decline. Estimates for 2018 remained unchanged at 4,50 percent.
The Top 5, the group with the most accurate projections in the Focus survey, showed that, based on the medium-term median, inflation as measured by the IPCA is expected to close 2017 slightly below the center of the target, at 4,45 percent, compared to 4,54 percent previously. For 2018, the forecast remained at 4,50 percent.
In January, the IPCA-15 rose 0,31 percent, less than expected, falling below 6 percent over 12 months. The government's official target for the two-year period is 4,5 percent for the IPCA, with a margin of 1,5 percentage points.
Despite the greater flexibility in interest rates, which tends to stimulate consumption, the experts consulted by Focus did not improve their projections for Gross Domestic Product (GDP) growth for 2017 and 2018, remaining at 0,50 and 2,20 percent, respectively.
(By Patricia Duarte)