Brazil Central Bank Admits Inflation Control Failure... 8.5% Increase Expected This Year

[Asia Economy Reporter Park Byung-hee] The Central Bank of Brazil has officially acknowledged its failure to control inflation and significantly raised its inflation forecast for this year from 5.8% to 8.5%.

In the third-quarter economic outlook report released on the 30th of last month (local time), the Central Bank of Brazil stated that controlling inflation has become practically difficult and revised its inflation forecast upward.

The Central Bank of Brazil had set this year's inflation target at 3.75%, operating monetary policy with an allowable range of plus or minus 1.5 percentage points. However, due to the surge in raw material prices and supply chain disruptions this year, inflation exceeded the control range, rising sharply especially in fuel and food prices. The central bank responded aggressively by raising the benchmark interest rate from 2% in March to 6.25% at the end of last month, but it was ineffective.

Brazil's consumer price inflation rate, which was 4.56% in January this year, soared to 9.68% in August.

Market experts expect the trend of raising the benchmark interest rate to continue at least until next year, forecasting inflation to reach 8.25% by the end of this year and 8.5% by the end of next year.

The rise in inflation, along with increasing unemployment, is causing public opinion to worsen against President Jair Bolsonaro's administration.

In a recent public opinion poll, the evaluation of Bolsonaro's government performance was 22% positive, 23% neutral, and 53% negative. Regarding impeachment, 56% were in favor and 41% opposed.

As public opinion deteriorates, anti-government protests are expected to continue. Large-scale protests involving opposition parties are scheduled for October 2 and November 15.

This content was produced with the assistance of AI translation services.