Economists covering Brazil cut their 2012 inflation forecast for the first time in eight weeks, cementing expectations that the central bank will continue to cut interest rates.
Consumer prices will rise 5.6% next year, according to the median forecast in an Oct. 21 central bank survey of about 100 economists published Monday, compared with a forecast of 5.61% the previous week. Analysts also dropped their forecast that Brazil will miss its inflation target this year for the first time since 2003. Prices, as measured by the IPCA index, will gain 6.5% this year, from the week-earlier forecast of 6.52%, the survey showed.
The bank last week cut its benchmark Selic rate to 11.5% from 12%, saying this would protect Brazil from a more “restrictive” global economy without compromising the inflation target. Economists expect policy makers to lower borrowing costs by half a point at their November policy meeting, and to 10.5% by the end of 2012, the survey found, unchanged from the previous week’s forecasts.
Latin America’s biggest economy is expected to grow 3.3% this year, down from a forecast of 3.42% the previous week, the survey showed. Analysts also cut their 2012 growth forecast to 3.51% from 3.6%.