Halister News

(Bloomberg) -- Bank reduced forecast for IPCA inflation in 2017 to 3.2% from 3.8%, due to lower food inflation in May and to the reduction in forecast for inflation in gasoline, according to Credit Suisse’s report signed by analysts led by Nilson Teixeira.

• “Our forecast is compatible with inflation below 3.0% in 3Q17, reaching a minimum of 2.5% in August 2017 and rising slightly to 3.2% at year-end, as a result of a very low comparison base for inflation in 4Q16”
• “We have revised our forecast for the average price of oil from USD56 a barrel to USD51 in 2017 and from USD56 a barrel to USD50 in 2018”
• Bank also reduced forecast for IPCA in 2018 to 4.5% from 4.8%
  • “In light of the high inflation inertia in Brazil, the lower inflation in 2017 will contribute to a decrease in inflation in 2018”’
• “If our forecast materializes, the central bank will meet the inflation target set by the Brazilian Monetary Council”
• “However, this scenario depends on the outlook for the dynamics of the main economic variables”
• Credit Suisse says that the inflation report, released on June 22, reinforced analysis from the minutes of Copom meeting of May 31, suggesting the political crisis increases uncertainty regarding the progress of the much-needed economic reforms and adjustments
  • “In our opinion, the content of the June RI does not contain elements able to make us change our assessment of the pace of monetary easing at the next meetings of the Copom, as signaled by the notes on the meeting of May of the Copom”
  • “We believe that the June document is compatible with our expectation of a cut of 75 basis points (bps) in the Selic basic interest rate at the next meeting of the Copom (on July 26)”

To contact the reporter on this story: Leonardo Lara in Sao Paulo at llara1@bloomberg.net To contact the editors responsible for this story: Daniela Milanese at dmilanese@bloomberg.net Danielle Chaves