Brazil rate outlook rises, even as inflation expectations hold - central bank survey

  • 1/11/2021
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BRASILIA, Jan 11 (Reuters) - The outlook for Brazilian interest rates over the next two years rose to their highest in several months, a central bank survey of economists showed on Monday, even as exchange rate and inflation expectations held steady. The average forecast of the benchmark Selic rate at the end of this year rose to 3.25% from 3.00%, and the end-2022 forecast rose to 4.75% from 4.50%, according to the latest weekly ‘FOCUS’ survey of around 100 economists. The 2021 outlook is the highest since last June, and the 2022 forecast is the highest since last August. The Selic rate has been anchored at a record low of 2.00% since August. But against a backdrop of bubbling inflation pressures and fiscal concerns, the central bank indicated late last year that it may begin tightening policy sooner than most economists had predicted. The FOCUS survey on Monday showed that 2021 inflation expectations held steady at 3.3%, below the central bank’s target of 3.75%, and next year’s average forecast was unchanged at 3.50%, right on the central bank’s goal for the year. Economists expect the real’s exchange rate to end this year at 5.00 per dollar, unchanged from the week before, and ending next year at 4.90 per dollar. It is currently trading at 5.50 per dollar.

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