Brazil Analysts Raise Key Rate Forecasts as Economy Stays Hot

(Bloomberg) - Brazil analysts lifted their interest rate forecasts for this year and next after central bankers raised their economic growth projections and kicked off a monetary tightening cycle.

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The benchmark Selic will hit 11.75% this December, up from the prior estimate of 11.5%, according to a weekly central bank survey published Monday. Rates are expected to end next year at 10.75%, above the previous forecast of 10.5%.

Central bankers led by Roberto Campos Neto lifted rates on Sept. 18 in their first hike since 2022 to temper strong demand and haul inflation forecasts back toward the 3% target. Days later, policymakers raised their 2024 economic growth estimate for the third time. Factors including higher public spending and a robust labor market have investors betting on tightening into next year.

While Campos Neto said last week that recent inflation readings have shown "improvement," there's still cause for concern. Consumer prices rose 4.12% in early September from a year prior, according to the national statistics agency.

Most analysts see consumer price increases reaching 4.37% at the end of this year and 3.97% in 2025

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