The central bank holds inflation forecasts until 2026 in the RTI

Unsurprisingly, the central bank kept its inflation forecasts unchanged for 2024, 2025 and 2026, which currently stand at 3.5%, 3.2% and 3.2% respectively, according to the quarterly inflation report (RTI) released today.

In the document, the agency highlighted that there was higher inflation than the December interest rate index forecast, but with a downward revision to short-term estimates, especially for “volatile items, which rose more than expected in recent months, and higher prices from oil.” “Our goal is to bring inflation to the target set by the government. The important thing is to reach this target with the lowest cost to society: minimal unemployment and credit decline,” Central Bank President Roberto Campos Neto said during a press conference in São Paulo. This is Brazil, even if that last mile is a little more painful. We have achieved the inflation target at a very low cost.

Compared with the December inflation rate index, the probability that inflation in 2024 will exceed the upper limit of the target fell from 24% to 19%, according to BC Bank. For the years 2025 and 2026, the monetary authority kept the probability of exceeding the target unchanged at 17%.

In terms of economic growth, British Columbia revised its GDP expansion this year from 1.7% to 1.9%, which mainly reflects “slightly greater economic dynamism than expected at the beginning of the year, as suggested by the premier.” Available indicators.

From a supply perspective, BC argues that growth should depend on less contribution from less cyclical sectors, such as agriculture and extractive industries. On the demand side, the Authority expects a decline in growth in household consumption, due to the lack of transfers of government resources.

“The report had the same wording as Coboom’s last report [Comitê de Política Monetária do BC]“, which reinforces the increase in uncertainty and the need for greater flexibility in the management of monetary policy,” highlights, in a note sent to clients, economist Caio Megali, from XP, whose GDP is expected to grow by 2% this year.