Brazil 2021 inflation, interest rate forecasts climb to new peaks -survey

  • 7/19/2021
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BRASILIA, July 19 (Reuters) - The outlook for 2021 Brazilian inflation and interest rates rose to new highs, a survey of economists showed on Monday, indicating a growing consensus that the central bank will quicken the pace of policy tightening in the coming months. The median forecast for 2021 inflation from more than 100 economists in the central bank’s weekly FOCUS survey rose to 6.3% from 6.1%, significantly above the bank’s year-end goal of 3.75% and more than a percentage point above the 5.25% upper limit of its wider range. It marked the 15th consecutive weekly rise in inflation forecasts for this year. To prevent inflation expectations for next year running away, the central bank has raised its benchmark Selic rate to 4.25%, and is likely to raise it by at least another 75 basis points on Aug. 4. The FOCUS survey on Monday showed that economists’ year-end Selic median forecast rose to 6.75% from 6.63% a week ago. This shows economists believe the central bank will raise the Selic beyond the so-called ‘neutral’ rate, widely considered to be around 6.00%-6.50%, to keep 2022 inflation expectations in check. Next year’s median Selic forecast held steady at 7.00% and the median 2022 inflation forecast also held steady at 3.75%, the survey showed. That, however, is still above policymakers’ central target of 3.50%. The FOCUS survey showed that this year’s growth outlook held steady at 5.3%. A month ago it stood at 5.0%. (Reporting by Jamie McGeever; Editing by Bernadette Baum)

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