Credit Suisse Raises Terminal Selic Forecast to 14.25% from 13.75%

Credit Suisse revised its Selic terminal forecast this Monday 18th to 14.25% from 13.75%. The bank predicts that it will increase by 50 basis points in August and two more, by 25 points each, in September and October.

Credit reminds that in its most recent messages, the Central Bank said that it foresees a new adjustment of “equal or smaller size” in August. “Although the monetary authority had previously announced its intention to end the growth cycle in its previous two meetings, it was very surprised by the inflation process and, in our view, rightly continued to raise rates,” the report said.

“In our opinion, B.C. keeping the tightening cycle alive, albeit at a gradual pace, minimizes the risk of monetary policy losing credibility, as it would continue to demonstrate that it remains concerned about meeting the inflation target, while allowing additional time to assess how developments may develop inflation dynamics,” added the report, signed by the bank’s Brazil chief economist Solange Sur and economists Lucas Villela and Rafael Castillo.

For 2023, the bank estimates a Selic cut of 300 basis points, which would end the year at 11.25%.

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