Brazil economists raised their 2015 inflation forecast by more than a quarter-point and lowered their outlook for economic activity as the central bank raises borrowing costs.
Analysts boosted their forecast for inflation to 8.79 percent from 8.46 percent, according to the June 12 central bank survey of about 100 analysts published Monday. The central bank’s top five forecasters increased their forecast to 8.9 percent from 8.47 percent.
Brazil is the only central bank among the Group of 20 nations raising interest rates as above-target inflation erodes consumer and business confidence. Economists in the survey estimate gross domestic product will contract 1.35 percent this year before expanding 0.9 percent in 2016.
Consumer prices unexpectedly increased 0.74 percent in May, exceeding the 0.59 percent median forecast from economists surveyed by Bloomberg while pushing the annual rate to 8.47 percent. The central bank targets 4.5 percent inflation, plus or minus two percentage points.
In a bid to stem consumer price increases, central bank directors have raised the key interest rate in six straight meetings, to 13.75 percent. That’s the highest since January 2009.