(Bloomberg) — Brazilian analysts cut their benchmark interest rate projections for 2024 after the central bank reaffirmed its goal of accelerating financial easing in the coming months.
The Selic will fall to 9% through December 2024, down from the previous estimate of 9. 25%, according to a weekly survey of central bank economists released on Tuesday. Loan prices will fall to 8. 5% through the end of 2025, according to the statement. .
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Policymakers, led by Roberto Campos Neto, cut rates to 11. 75% this month and promised further half-point cuts over the next year. Headline inflation is slowing and customer value expansion measures that exclude volatile items such as energy and food are cooling. Board members also downgraded their economic expansion forecasts for 2024 as intake declines.
Read More: Brazil Cuts Rates by Half-Point, Cues Same Pace Into 2024
The central bank has now cut the Selic by two percentage points since August. Still, estimates for medium-term inflation remain above the bank’s 3% goal for 2024, with analysts seeing price increases at 3.91% next year.
In its quarterly inflation report released on Dec. 21, the authorities cut their forecast for economic expansion for 2024 from 1. 8% to 1. 7%. They see a moderation in agriculture and consumption, arguing that household incomes will be hit by the double boost of falling food costs. and emerging government spending is losing steam.
Brazil’s fiscal outlook holds up as Finance Minister Fernando Haddad negotiates with Congress on spending that would raise revenue to fund President Luiz Inácio Lula da Silva’s social and infrastructure programs.
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