Analysts covering Brazil’s economy raised their forecast for the benchmark rate at year-end, as policy makers seek to control accelerating annualized inflation in the world’s second-biggest emerging market.
Brazil’s Selic rate will be 8.50 percent at the end of this year, according to the median estimate in a central bank survey of about 100 analysts published today. Analysts had forecast 8.25 percent the previous week. The rate will be 8.50 percent at year-end 2014, the survey showed.
Brazil’s economy has reacted slowly to stimulus aimed at spurring the slowest growth among major emerging markets while cooling inflation. After gross domestic product grew by 0.9 percent last year, measures including tax cuts and record-low interest rates have helped drive recent retail sales and industrial output above forecasts. Brazil may require additional measures to slow inflation levels approaching the upper limit of the central bank’s target range, bank President Alexandre Tombini said on March 22.
Annualized inflation in mid-March accelerated for the sixth straight month to 6.43 percent, even as the pace of monthly consumer price increases slowed. Brazil’s inflation is under control and will not hinder the country’s growth, Finance Minister Guido Mantega said on March 21. The central bank targets inflation of 4.5 percent, plus or minus two percentage points.
Economists in the survey cut their forecast for inflation this year to 5.71 percent from 5.73 percent the previous week, and raised their call for inflation next year to 5.60 percent from 5.54 percent.
Brazil’s retail sales rose 0.6 percent in January from the month prior, beating analysts’ forecasts of a 0.4 percent increase, the national statistics agency said on March 14. Industrial production in January jumped 2.5 percent, compared with a median forecast of 1.6 percent.
Gross domestic product will expand 3 percent this year, the survey showed, down from 3.03 percent the previous week. Brazil grew by 2.7 percent and 7.5 percent in 2011 and 2010, respectively.
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