Brazil’s central bank raised its forecast for inflation in 2015 and cut its view for 2016, though not enough to bring next year’s figure into line with its target.
The country will end this year with a 12-month inflation rate of 9.0%, the central bank said in its quarterly inflation report, published on Wednesday. In its March report, the bank had forecast inflation of 7.9% for 2015, Nasdaq reported.
The bank lowered its forecast for inflation in 2016 to 4.8% from 4.9%. The bank’s target is to get annual inflation to 4.5%.
The bank also cut its forecast for gross domestic product to a contraction of 1.1% this year, from a contraction of 0.5% it forecast three months ago.
Brazil is now half way through what economists, analysts and politicians all agree will be its worst year, economically, in a long time.
The government has been raising taxes and cutting spending since President Dilma Rousseff was reelected with a slim majority last October, while investment by companies and spending by consumers have declined and unemployment has risen.
Rousseff’s approval ratings have plunged since she was reelected, and her government is facing more resistance from a congress dominated by her coalition, as she struggles to get more austerity measures passed and avoid a possible downgrade to Brazil’s investment-grade credit rating.
