Brazil Economists See Less Room for Cutting Rates Next Year

MARIO SERGIO LIMA, BLOOMBERG BUSINESS, 10/13/2015

Brazil analysts forecast that the central bank will have less room for cutting rates next year, as inflation expectations for 2016 rose for the 10th straight week.
Brazil’s benchmark Selic rate will reach 12.63 percent at year-end 2016, up from the previous week’s estimate of 12.50 percent, according to the Oct. 9 central bank survey of about 100 analysts. The economists raised their estimates for 2015 and 2016 inflation to 9.70 percent and 6.05 percent respectively, and cut their growth forecasts to declines of 2.97 percent this year and 1.2 percent next year.
Political strife that’s contributing to Brazil’s economic slump continues even after President Dilma Rousseff shuffled her Cabinet to strengthen the ruling coalition in Congress. Key votes on measures to help mend the budget deficit have been postponed, and the head of the lower house is expected to rule soon on whether to accept proposals to begin impeachment proceedings against the president.

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