© Reuters. FILE PHOTO: Outbreak of the coronavirus disease (COVID-19), in Rio de Janeiro
BRASILIA (Reuters) – The outlook for Brazilian inflation rose for a fifth consecutive week, a central bank survey of economists showed on Monday, closer to the bank’s central target for the year. The average forecast for IPCA consumer price inflation at the end of the year rose to 3.60% from 3.50% the week before, according to the latest weekly ‘FOCUS’ survey of around 100 economists. That’s the highest since last March, and close to the central bank’s end-year goal of 3.75%, with a margin of error of 1.5 percentage point on either side. Inflation in Brazil, led by a spike in food prices, has proved to be less “transitory” than the central bank had thought. It ended last year at 4.5%, well above the central bank’s central target of 4.00%. With inflation expectations converging towards target over the next two years, the bank in January ditched its forward guidance after only five months. Markets then brought forward forecasts for the first interest rate hike since 2015. For the second week in a row, however, the FOCUS survey on Monday showed that economists’ average end-2021 and end-2022 rate forecasts were unchanged at 3.50% and 5.00%, respectively.
The central bank’s benchmark Selic rate has been at a record low of 2.00% since last August.
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