The week before, in the last newsletter of the year, the growth expectation for 2022 was the same 3.04% and that of 2023 was 0.79%, a little below the current one.
The report adds that financial agents expect inflation in Lula’s first year to be 5.31%, above the 5.23% forecast a week ago.
However, by 2022, the market calculated that inflation closed at 5.62%, above the target ceiling, which was 5%. The official data will be officially released in the coming days.
What will happen to rates and the deficit in Lula’s government
The Brazil’s central bank will take longer to cut its benchmark interest rate from the current level of 13.75%according to a survey of economists, who also estimate that inflation expectations will further deteriorate during the first years of the government of President Luiz Inácio Lula da Silva.
The benchmark Selic rate will hit 12.25% in December, up from a previous estimate of 12%, according to a weekly central bank survey published on Monday. The first survey published after Lula’s inauguration brought with it a new round of upward revisions to inflation estimates: consumer prices are now forecast to rise 5.31% this year, up 3.65% in 2024 and 3.25% in 2025, all above the target.
Those responsible for monetary policy, headed by Roberto Campos Neto, they monitor “closely” the reforms that may have an impact on Brazil’s fiscal prospects. They have warned against an expansion of subsidized credit and a rollback of labor reform, saying both measures could “reduce” the power of their tightening cycle. After adding 11.75 percentage points to borrowing costs, central bankers have now held rates steady at 13.75%, their highest level in six years.
Lula took office on Sunday promising economic inclusion and prosperity driven by state-owned companies and public banks. This year he is expected to launch a 169 billion reais ($32.1 billion) spending plan that is likely to boost inflation with more aid for the poor and increases in the minimum wage. Fuel tax breaks, which helped drive down prices last year, will be extended for 60 days.
The finance minister, Fernando Haddad declared in an interview with the local newspaper O Globo that a new fiscal rule could be discussed in April to replace the old spending limit law. He also vowed to “harmonize” monetary and fiscal policies, in a speech investors interpreted as more fiscally responsible.
Source: Ambito
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