Saturday, February 25, 2012

Brazil interest rate forecast 2013- 2014

World Economic outlook - Brazil interest rate forecast 2013- 2014 : Analysts covering Brazil increased their 2013 year-end interest rate forecast for a second straight week on concerns the U.S. economic recovery may fuel inflation.

The benchmark Selic rate will end 2013 at 10.75 percent, according to the median forecast in a Feb. 3 central bank survey of about 100 economists published today, up from an estimate of 10.38 percent the previous week. In Mumbai last week, central bank President Alexandre Tombini said Latin America’s biggest economy still has “some room” to cut rates from their current level of 10.5 percent.

The bank, in the minutes to its Jan. 17-18 meeting, said there is a “high” chance it will continue to cut its benchmark rate until it is below 10 percent. Tombini began cutting borrowing costs in August to protect Brazil from the European debt crisis, and has signaled he will continue to do so even after recent data show the economy accelerating.

“We saw better-than-expected data in the U.S. and this could lead to inflationary pressures ahead,” Luciano Rostagno, chief strategist at Banco WestLB do Brasil in Sao Paulo, said in a phone interview. “Even though the central bank is confident it will cut rates to one digit, investors believe policy makers will have to resume rate increases to keep inflation under control.”

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