Brazil’s Inflation Forecast Cut

Source: MarketWatch

Financial market analysts and economists reduced their forecasts for Brazil’s inflation this year for the ninth consecutive week, a survey by the Central Bank of Brazil showed Monday.

Economists now expect the country’s inflation to average 5.28% this year, down slightly from a forecast of 5.29% a week earlier, according to the survey. The forecast is still above the central bank’s inflation target of 4.5% for the year.

Brazil’s inflation rate reached 6.50% last year, the highest since hitting 7.6% in 2004.

For 2013, respondents kept their inflation forecast at 5%.

The central bank’s weekly survey tracks the opinions of 100 analysts and economists and reports the average of their expectations.

The forecast for the central bank’s benchmark Selic interest rate at the end of 2012 remained at 9.50%, while the forecast for end-2013 was raised to 10.38% from 10.25%.

Respondents kept their estimate for Brazil’s 2012 gross domestic product growth at 3.27%. For 2013, they lowered their view to 4.15% from 4.25%.

The average expectation for Brazil’s debt-to-GDP ratio at the end of this year was reduced to 36.95% from 37%.

The forecast for this year’s trade surplus increased to $19.80 billion, from $19.60 billion. Analysts expect Brazil to post a current-account deficit of $65.90 billion at the end of this year.

Brazil’s currency, the real, is expected to end this year at BRL1.80 to the dollar, according to the survey.