Market estimates for Selic in July is 25%

23/06/2003 - 18h10

Brasília, 6/24/2003 (Agência Brasil-ABr) - Market expectations are that Brazil's basic interest rate (Selic) will fall to 25% next month, reports the latest Central Bank's weekly financial survey, Focus. The new market estimate is down from 25.17% a week ago in the last survey.

On Thursday the minutes of last week's Monetary Policy Committee (Copom) meeting will be released. For the time being, the only explanation for the decision to reduce the Selic by 0.5 percentage points (from 26.5% to 26%), is "inflation projections are converging on [the government's] target."

The Focus survey also found that market estimates for inflation (as measured by the Broad Consumer Price Index - IPCA) were now 11.95% for the year. Estimates for the exchange rate were for the dollar to be at R$3.05 in July (down from R$3.07 in the last survey). For the end of the year, the market estimate is for a dollar at R$3.30 (stable). And for 2004, at R$3.50. Finally, market estimates for the trade surplus have risen from US$16.3 billion to US$16.5 billion. (AB)