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Brazil’s rate and inflation outlook in 2021 reaches new highs: Focus polls

BRASILIA, Apr 26 (Reuters) – Brazil’s inflation outlook in 2021 rose to 5% for the first time and the interest rate forecast hit a new top of 5.50%, a survey among analysts said on Monday. a sign that the central bank could apply an aggressive hike to financing costs at its next meeting.

The median forecast for inflation in 2021 among 100 economists consulted by the central bank for the weekly Focus survey increased to 5% from 4.9%, being well above the official goal of the agency of 3.75% for this year and approaching the upper limit of the range, 5.25%.

The president of the central bank, Roberto Campos Neto, has repeatedly defended the entity’s plans to raise borrowing costs drastically at the beginning of the cycle of monetary adjustments, in order to avoid raising rates too much towards the end of the curve, which would keep inflation expectations under control in 2022.

The central bank’s monetary policy committee, known as “Copom,” will meet on May 4-5 and a large majority of analysts expect it to repeat its controversial decision last month to raise the Selic interest rate by 75 points. , this time leaving it at 3.50%.

At a time when inflation in Brazil already exceeds 6% and is expected to continue accelerating before starting to slow down, traders are now contemplating an increase of up to 100 basis points in the Selic rate.

The average inflation forecast for 2022 remained unchanged at 3.6%, according to the Focus survey, still above the central bank’s goal of 3.5%.

(Reporting by Jamie McGeever. Edited in Spanish by Marion Giraldo)

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