• Analysts surveyed by Bloomberg more cautious than traders
  • GDP forecasts improved and inflation estimates unchanged

Brazil’s central bank will cut its benchmark interest rate only in the last quarter of the year, contradicting traders who are betting on more aggressive monetary easing starting in August, a Bloomberg survey of economists shows.

Policy makers led by central bank president Ilan Goldfajn will slash the Selic rate by 75 basis points in the last two meetings of the year to 13.50 percent, according to the median forecast of 35 analysts in the survey published on Thursday.

Traders are betting on a total rate cut of 100 basis points by the end of this year, starting in August, interest-rate futures show. Brazil’s annual inflation slowed to 8.98 percent in mid-June from 9.62 percent in the previous month, according to the IPCA-15 index.

In the previous Bloomberg survey in May, when former chief Alexandre Tombini was in charge, the analysts saw a total half point cut in the final quarter of the year.

Inflation expectations may improve as Acting President Michel Temer proposes a constitutional amendment to cap government expenditures from next year in an effort to narrow a budget deficit of around 10 percent of gross domestic product.

The survey also shows Brazil’s economy contracting 3.5 percent this year before rebounding to a growth of 0.9 percent next year. The median estimate for inflation remains unchanged from May at 8.6 percent this year and 6 percent in 2017.

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