SÃO PAULO: The Brazilian central bank raised its forecast for consumer-price inflation in 2016 and reduced slightly its view for next year, according to the bank’s quarterly inflation report.
The bank increased its forecast for Brazil’s consumer-price index, or IPCA, for this year to 6.9% from 6.6% in March’s report. Meanwhile, it reduced its forecast for next year to 4.7%, from 4.9%. The rolling 12-month consumer-price index was at 8.98% in mid-June, well above the 4.5% ceiling set by the central bank. The target has a tolerance band of between 2.5% and 6.5%.
“The central scenario doesn’t allow us to work with the hypothesis of an easing of monetary conditions,” the central bank said in its report, published Tuesday. The bank held its Selic benchmark interest rate unchanged earlier this month at 14.25%, where it has been since July, as inflation remains well above the target rate.
The central bank improved its view for country’s gross domestic product this year, although it continued to predict a deep recession. For this year, the bank expects a contraction of 3.3% compared with an expected decline of 3.5% in March’s report. Last year, Brazil’s economy contracted 3.80%.
