Insider

Markets raise inflation, interest forecasts — bearish on GDP

Markets raise inflation, interest forecasts — bearish on GDP
Image: Hoowy/Shutterstock

The latest edition of the Focus Report, a weekly survey by the Central Bank with top-rated investment firms, shows that markets continue to grow pessimistic about the Brazilian economy. 

Median GDP forecasts have fallen for the fifth consecutive week, to 5.04 percent. Meanwhile, inflation predictions extended a 22-week streak of increases, with investors now believing that 12-month consumer prices will end the year at 8.2 percent. Brazil’s 12-month inflation currently stands at 9.68 percent.

Higher inflation will lead to further bumps to benchmark interest rate Selic, from the current 5.25 percent to an expected 8 percent by year-end.

According to finance newspaper Valor, political tensions and rising inflation have led many hedge funds to lower — or even completely exhaust — their positions on the Brazilian market. “Brazil has entered a negative spiral and it is getting harder to be optimistic about it,” ACE Capital’s Fabricio Taschetto told the newspaper.