Brazil analysts cut their 2014 key rate and economic growth forecasts, after the country’s gross domestic product slowed in the first quarter on the biggest investment drop in two years.
Brazil’s central bank will hold the benchmark Selic at 11 percent this year, compared with the previous week’s forecast of an increase to 11.25 percent, according to the May 30 central bank survey of about 100 analysts published today.
Analysts cut their growth estimate for this year to 1.50 percent, the lowest ever, down from 1.63 percent last week.
President Dilma Rousseff’s administration is pinned between lackluster economic activity and above-target inflation.
Brazil’s growth slowed in the first quarter from the previous three months as investment and family consumption dropped.
While the central bank last week halted key rate increases, policy makers signaled in an accompanying statement that they may make further adjustments in the months ahead.
Brazil’s economy increased 0.2 percent in the first quarter, half the pace of the revised growth figure recorded during the last three months of 2013, the national statistics agency said on May 30. Investment fell 2.1 percent in the quarter, while family consumption dropped 0.1 percent.
While high inflation and a weak U.S. recovery hurt first quarter growth, Brazil’s economic activity improved in April and May, Finance Minister Guido Mantega told reporters in Sao Paulo on May 30.
Consumer price increases will slow in the second quarter as policy maker actions prevent them from quickening, he said.
Borrowing Costs
The central bank on May 28 held the benchmark Selic unchanged at 11 percent after increasing borrowing costs by 375 basis points during nine previous meetings. In an accompanying statement, policy makers said they decided “at this moment” not to move borrowing costs.
Consumer prices rose 0.58 percent in the month through mid-May, marking the smallest increase since November, the national statistics agency said on May 15. Still, annual inflation quickened to 6.31 percent, above the central bank’s target of 4.5 percent.
Economists in the central bank survey maintained their 2014 inflation forecast at 6.47 percent and increased their consumer price estimate for next year to 6.01 percent from 6 percent.
They also held their 2015 Selic forecast at 12 percent. Latin America’s largest economy will expand by 2 percent this year, according to central bank estimates.
bloomberg.com
Brazil’s central bank will hold the benchmark Selic at 11 percent this year, compared with the previous week’s forecast of an increase to 11.25 percent, according to the May 30 central bank survey of about 100 analysts published today.
Analysts cut their growth estimate for this year to 1.50 percent, the lowest ever, down from 1.63 percent last week.
President Dilma Rousseff’s administration is pinned between lackluster economic activity and above-target inflation.
Brazil’s growth slowed in the first quarter from the previous three months as investment and family consumption dropped.
While the central bank last week halted key rate increases, policy makers signaled in an accompanying statement that they may make further adjustments in the months ahead.
Brazil’s economy increased 0.2 percent in the first quarter, half the pace of the revised growth figure recorded during the last three months of 2013, the national statistics agency said on May 30. Investment fell 2.1 percent in the quarter, while family consumption dropped 0.1 percent.
While high inflation and a weak U.S. recovery hurt first quarter growth, Brazil’s economic activity improved in April and May, Finance Minister Guido Mantega told reporters in Sao Paulo on May 30.
Consumer price increases will slow in the second quarter as policy maker actions prevent them from quickening, he said.
Borrowing Costs
The central bank on May 28 held the benchmark Selic unchanged at 11 percent after increasing borrowing costs by 375 basis points during nine previous meetings. In an accompanying statement, policy makers said they decided “at this moment” not to move borrowing costs.
Consumer prices rose 0.58 percent in the month through mid-May, marking the smallest increase since November, the national statistics agency said on May 15. Still, annual inflation quickened to 6.31 percent, above the central bank’s target of 4.5 percent.
Economists in the central bank survey maintained their 2014 inflation forecast at 6.47 percent and increased their consumer price estimate for next year to 6.01 percent from 6 percent.
They also held their 2015 Selic forecast at 12 percent. Latin America’s largest economy will expand by 2 percent this year, according to central bank estimates.
bloomberg.com
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