Brazil Economists Boost 2015 CPI Forecast, Cut Growth Estimate

Brazil economists raised their forecast for inflation and cut their estimate for growth this year, as the the government negotiates with Congress over tax increases and spending cuts to trim the budget deficit.

Analysts raised their 2015 inflation estimate to 8.23 percent from 8.13 the prior week, according to the Apr. 17 central bank survey of about 100 analysts published today. The last time inflation ended the year above the government-set target was 2003. The economists also lowered their forecast for economic growth to a decline of 1.03 percent from negative 1.01 percent previously. Analyst kept their forecast for the key rate by the end of the year at 13.25 percent.

As inflation shows signs of resilience after the first quarter, which central bank President Alexandre Tombini said would show the fastest rate of price increases, analysts expect policy makers next week to lift the benchmark rate for the fifth straight meeting, even as analysts forecast a recession this year.

Inflation in the month through mid-April slowed less than economists estimated. Consumer prices as measured by the benchmark IPCA-15 index slowed to 1.07 percent from 1.24 percent a month earlier, the national statistics agency said on Apr. 17. That was above the median 1.02 percent forecast from 37 economists surveyed by Bloomberg. Annual inflation sped up to 8.22 percent from 7.90 percent. Analysts forecast 8.17 percent.

Policy makers have raised the benchmark interest rate to 12.75 percent from 11 percent since October. Brazil’s inflation outlook hasn’t improved enough to allow policy makers to stop being vigilant, Tombini said on Apr. 14.

Brazil’s economy unexpectedly grew in the fourth quarter last year as gross domestic product rose 0.3 percent from the three previous months. Analysts who had forecast stagnation for full-year 2014 were surprised by growth of 0.1 percent, down from a revised 2.7 percent in 2013. The national statistics agency used a new methodology to arrive at the GDP numbers.

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