Financial market analysts have raised their estimates for inflation in both this year and in 2011. The market now sees the Broad Consumer Price Index (“IPCA” – the government’s official inflation metric) at 5.01% at the end of this year (up from 4.97%), and at 4.95% at the end of 2011 (up from 4.90%). The numbers are in the Central Bank’s weekly market survey known as the Focus report.
The government’s official inflation target is an IPCA at 4.5% at the end of both 2010 and 2011. The official target has wiggle room, however; there is a “margin of error” of give or take two percentage points. Which means it could vary between 2.5% and 6.5%.
As for the benchmark interest rate, the Selic, market expectations are that it will close out 2010 at 10.75%, and 11.75% in 2011.