Financial market reduces inflation expectations for 2024 to 4.63%

Financial market expectations related to inflation are more optimistic than they were a week ago. According to the Focus Bulletin released this Monday (25), the Broad National Consumer Price Index (IPCA) – considered the country’s official inflation – should close the year at 4.63%. Last week, the market projected inflation of 4.64% in 2024. Four weeks ago, inflation of 4.55% was expected.

Released weekly by the Central Bank, the Focus Bulletin projects an IPCA of 4.34% in 2025; and 3.78% in 2026.

The estimate for 2024 is above the ceiling of the inflation target that must be pursued by the BC. Defined by the National Monetary Council (CMN), the target is 3% for this year, with a tolerance range of 1.5 percentage points up or down. In other words, the lower limit is 1.5% and the upper limit is 4.5%.

From 2025 onwards, the continuous target system will come into force and, therefore, the CMN will no longer need to define an inflation target each year. The board set the center of the continuous target at 3%, with a tolerance margin of 1.5 percentage points up or down.

Selic and dollar

To meet the inflation target, the Central Bank adopts as its main instrument the basic interest rate (Selic), defined by the Monetary Policy Committee (Copom), at 11.25%. The bulletin has maintained the expectation for 8 weeks that the Selic will reach 11.75% at the end of the year.

Among the factors considered by the Copom to define the Selicest is the rise in the dollar, which has been observed in recent weeks; and the international context, which also records high inflation.

Given this scenario, the market projects, for the sixth consecutive week, an upward trend in the US currency. The expectation is that the dollar will close 2024 at R$5.70. A week ago, the forecast was that, at the end of 2024, the dollar would be priced at R$5.60. Four weeks ago, financial market expectations were at R$5.45.

For subsequent years (2025 and 2026), the market projects prices of R$5.55 and R$5.50, respectively.

GDP

Regarding the Gross Domestic Product (GDP – the sum of goods and services produced in the country), the market is more optimistic than a week ago, with an expectation of growth that exceeded 3.10%, observed last week, par 3.17%, according to the bulletin released today. Four weeks ago, the market projected lower growth of 3.08%.

Growth estimates for 2025 and 2026 are, respectively, 1.95% and 2%.