Clipping of news on Brazilian Culture, Law and Citizenship
01/12/2015
This article was translated by an automatic translation system, and was therefore not reviewed by people.
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Official inflation in Brazil in 2014, as measured by the Consumer Price Index (IPCA), will be known on Friday (9), will be released when the data from the Brazilian Institute of Geography and Statistics (IBGE). The expectation of the government, the Central Bank and the market itself is that although by tight margins, the change in prices will be below the target of 6.5% in the year.
Brazil adopts the system of inflation targeting as a major guiding its monetary policy since 1999. It is a commitment that the country has made to keep the price fluctuation within a tolerance limit, to give security to the market.
The current inflation target is 4.5%, with two-point tolerance more or less. Thus, the ceiling is 6.5%. If the IPCA pop that ceiling, the president of the BC is obliged to disclose an open letter to the Minister of Finance justify the breach and stating what measures will be adopted to ensure that inflation returns to levels tolerated.
The last time this happened was in 2004, with explanations for the "overflow" of the 2003 target - a year in which inflation rose packed by soaring dollar. In 2011, the IPCA was 6.50% and was the target ceiling limit.
Expected inflation below the ceiling
According to the estimate of the financial market released by Focus last newsletter, the IPCA expected to be 6.39% in 2014. The survey, released on Monday (5), was conducted by the Central Bank last week with more than 100 financial institutions .
Already BC is forecast inflation of 6.4%, according to the latest inflation report released late last year. The latest forecast by the Ministry of Finance IPCA was up 6.4%, but without breaking goal.
IPCA up to 0.86% in December not bursts goal
According to calculation of IBGE, the IPCA December need to be up to 0.86% to not blow the target ceiling set by the government for 2014. In November, the official inflation rate stood at 0.51%.
"What will happen to close the year is that we will exchange a rate of 0.92%, which was a high rate, the rate of December 2013, by another not yet known, the IBGE will measure. What we have seen over the last few months is that the rate is hovering around 6.5%. In a few months this year, the rate was below that figure - so, to measure the outcome of December, we'll see if this trend of recent months will prove, "pointed Eulina Nunes dos Santos, coordinator of organ Price Indices, commenting on the results of November.
Inflation above the central target for the 5th year in a row
Even if you stay below the ceiling, inflation will burst the central target of 4.5% per year for the 5th consecutive year. In 2013, the IPCA closed at 5.91%.
In the 12 months to November, the official inflation accumulated a 6.56%, a total of 4 months in a row above the Central Bank's target.
For 2015, the expectation of the Central Bank is around 6%. In the baseline scenario, the forecast was 5.8% in September, an estimated advanced to 6.1%. In the market scenario, which was estimated at 6.1% in September, became 6% this December.
The BC president, Alexandre Tombini, said the inflation is likely to continue high, reaching the "peak" in the first quarter of 2015. According to him, the IPCA begin to converge toward the central inflation target of 4.5% from the second quarter of next year.
Source: G1
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This article was translated by an automatic translation system, and was therefore not reviewed by people.