Brazil Analysts Lift 2025 Interest Rate and Inflation Forecasts
Brazil’s economy is expected to grow less than previously thought in 2023 and 2024, and inflation is now forecast to remain above the central bank’s target through 2025, according to a monthly survey of economists published by the central bank on Monday.
The median forecast among analysts surveyed by the central bank is that the benchmark Selic interest rate will need to rise to 13.75% by the end of this year, up from the current 13.25%, and remain there through 2024.
The central bank has raised the Selic rate by 1,150 basis points since March 2021 in an effort to tame inflation, which hit a 12-year high of 12.13% in April.
Inflation is now forecast to end this year at 5.75%, above the central bank’s target of 3.50%. It is not expected to fall within the target range until the second half of 2024.
The analysts also lowered their growth forecasts for 2023 to 2.88% from 3.00% previously, and for 2024 to 2.25% from 2.50%. The economy is now expected to grow by just 0.75% this year, down from a previous forecast of 1.75%.
The central bank’s survey of analysts is closely watched by investors and policymakers as a gauge of market expectations for the economy and monetary policy.
The latest survey suggests that analysts are becoming increasingly pessimistic about the outlook for Brazil’s economy, and that they expect the central bank to keep interest rates high for longer than previously thought.
