(Bloomberg) — Brazil’s central bank has struck a more optimistic tone than investors about economic growth this year as it slowly approaches the end of one of the world’s most aggressive monetary tightening cycles.
Monetary policymakers kept their 2022 gross domestic product forecast steady at 1%, according to their quarterly inflation report released Thursday. Economists surveyed by the bank forecast a GDP expansion of 0.5% this year and 1.3% next.
“A favorable outlook remains for some specific sectors, such as agriculture and livestock, and the economies that are still in the process of recovery after the negative impacts of the pandemic,” he wrote. Central bankers expect a recovery in monthly indicators from February and March as the outlook for Covid-19 improves.
Members of the central bank’s board, led by Roberto Campos Neto, have signaled plans to end their cycle of rate hikes after a final 100 basis point increase in May. These intentions hinge on expanding commodity costs, which are expected to be valuable as consumers in recent months. The central bank chief said on Wednesday that inflation will peak in April and then ease towards the target.
The central bank’s inflation projections in its benchmark outlook were unchanged from the minutes of its last monetary policy meeting, at 7.1% for this year and 3.4% in 2023. consumption of 2.4% in 2024.
Last week, central bankers also introduced an “alternative scenario” for inflation, which they now see as more likely, in which oil prices rise to $100 a barrel in December. In this perspective, the value of valuable goods as consumers is 6.3% in 2022, 3.1% in 2023 and 2.3% in 2024.
With Russia’s invasion of Ukraine adding to cost-of-living shocks, most analysts believe that policymakers will have to raise rates again in June. Annual inflation is 10.54% in February, and expectations are high as market consumers are expected to be 3.5% for the year and 3.25% in 2023.
In the minutes of their latest rate decision, policymakers wrote that “serenity” is needed in times of volatility. They added that it could “adjust the size of the monetary adjustment cycle, in case the scenario evolves unfavorably.”
Brazil’s economy emerged from a technical recession last year and posted 4.6% growth for all of 2021.
The Central Bank of Brazil forecasts faster growth in 2022 than investors
More stories like this are available at bloomberg.com
©2022 Bloomberg LP