(Corrects title and text to clarify that projections are from Santander Asset and not Santander Brasil)
SAO PAULO (Reuters) – Santander Asset raised its estimate for the Selic base interest rate at the end of this year to 12.25%, at the same time that it raised its forecast for the IPCA high in the period to a level still above the official 2022 target.
Previously, the asset manager had projected Brazilian basic interest rates at 11.75% at the end of the year, but stronger signals from the Central Bank in the minutes of its last monetary policy meeting and the persistence of inflation justified a revision, which, according to the Santander Asset, has “bullish bias”.
In a monthly scenario update report for March, Santander Asset began to see the IPCA up 5.9% at the end of 2022, a rate well above the official target for the year, which is 3.5%, with a margin tolerance of 1.5 percentage points plus or minus. The previous forecast was for inflation of 5.4% this year.
For 2023, the projection for the IPCA was maintained at a high of 3.7%.
The adjustment in the accounts for inflation comes after a stronger-than-expected reading for the IPCA-15 in February, when the index rose 0.99%, the highest rate for the month in six years.
“The opening continued to show widespread pressures, with very high industrial goods inflation and services inflation on an accelerating trend,” said the manager in the report. “Prospectively, we do not see a rapid reversal of this picture.”
On the other hand, Santander Asset slightly improved its forecast for the exchange rate, seeing the real at 5.30 per dollar at the end of 2022. At the end of last month, the manager estimated the price of the currency at 5.40 per dollar. .
“The foreign flow and the interest rate differential (from Brazil) with the American economy favor the appreciation of the real”, said the manager, although she pointed to the withdrawal of global monetary stimuli, geopolitical tensions abroad and fiscal uncertainties at the local level. as possible obstacles to the Brazilian currency.
(By Luana Maria BeneditoEdited by Camila Moreira)
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