Brazil Analysts Lift 2025 Key Rate Forecast as Tightening Looms
(Bloomberg) -- Brazil economists raised their 2025 benchmark interest rate forecasts as investors see the central bank starting a cycle of borrowing cost hikes this week.
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The benchmark Selic will hit 10.5% by December, 2025, up from the prior estimate of 10.25%, according to a weekly central bank survey published Monday. Analysts kept their estimates for borrowing costs at the end of this year steady at 11.25%.
Central bankers led by Roberto Campos Neto are seen changing course and kicking off a hiking cycle on Wednesday. Annual inflation has been running above the monetary authority’s 3% goal for months, as services costs and core measures excluding energy and food items pick up. Last week, the government raised its 2024 economic growth forecast to 3.2% from 2.5%.
Gross domestic product blew past analyst forecasts in the second quarter on gains from family consumption to industry, the national statistics agency reported. The central bank’s GDP proxy showed activity fell in July.
Most analysts lifted their annual inflation estimates to 4.35% at the end of this year, and 3.95% in December 2025. In a twelve-month horizon, similar to the bank’s current target, price rises are seen at 4.05%.
Inflation has come under pressure from a weaker real, a tight labor market and higher public spending. On Friday, the Finance Ministry’s Economic Policy Secretary Guilherme Mello told journalists the government could override fiscal deficit limits and issue emergency credit to battle destructive wildfires.
The administration is also mulling new emergency aid for fishermen due to severe drought, Social Development Minister Wellington Dias said Thursday in an interview with GloboNews.
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