The Brazilian Central Bank projection for the growth of the country’s Gross Domestic Product (GDP) in 2018 fell to 1.6%, according to the inflation report for the second quarter of this year. In March’s Quarterly Inflation Report (RTI), the estimate was at +2.6%.

Regarding inflation, the estimate for 2018 rose from 3.8% to 4.2% in the period, in a scenario with a constant interest rate of 6.50% per year and a constant exchange rate of R$ 3.70. For 2019, the forecast remained at 4.1%, while for 2020, inflation estimates in the same scenario went from 4.0% to 4.1%.

In this scenario, the estimated odds of inflation exceeding the upper and lower limits of the target tolerance range in 2018 are close to 2% and 9%, respectively, according to the BC. In March, those odds were at 2% and 24%.

By 2019, the odds remained around 12% and 17%, in the same order, while for 2020 the odds for the upper and lower limits are around 16% and 13%, from around 14% in the report for the first quarter of this year.

According to the RTI released today, in the scenario with interest and exchange rates extracted from the Focus survey, inflation projections are around 4.2% for 2018 and 3.7% for 2019. By 2020, the projections are around 3.7%.

In this scenario, the estimated probabilities of inflation exceeding the upper and lower limits of the target tolerance range in 2018 are close to 2% and 8%, respectively. By 2019, the odds are around 7% and 25% for the upper and lower limits, while for 2020 the odds are around 10% and 19%, in the same order.

The material has been provided by InstaForex Company – www.instaforex.com

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