Brazil Economists Cut 2015 CPI Outlook for First Time This Year

Brazil economists cut their 2015 inflation outlook for the first time this year, as the government increases interest rates and reaffirms its commitment to cut spending.

Analysts cut their year-end inflation forecast to 8.13 percent, from 8.2 percent estimated the previous week, according to the April 10 central bank survey of about 100 economists published today. The last time they lowered their inflation forecast was Dec. 26. The economists also maintained their forecast for a 1.01 percent economic contraction this year, marking the first time since December they didn’t reduce their call.

Inflation quickened less than analysts expected in March, according to a report released April 8. Still, annual consumer prices through that month rose 8.13 percent, the highest since December 2003. Prices are being stoked by a weaker real and higher costs of government-regulated prices such as electricity.

Hundreds of thousands of protesters returned to the streets of Latin America’s largest nation Sunday in opposition to President Dilma Rousseff’s government. Turnout was less than an anti-government protest staged last month.

Responding to above-target inflation, monetary policy makers in March raised the benchmark interest rate for the fourth straight time, to 12.75 percent. Economists in the survey predict the Selic rate will end the year at 13.25 percent.

Finance Minister Joaquim Levy said April 10 that the government must show investors it will keep its public finance in order, reiterating his commitment to meet this year’s fiscal target.

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