Brazil analysts boost inflation, interest rate calls for 2016

Matthew Malinowski and David Biller – Bloomberg Business, 10/26/2015

Brazil analysts forecast faster inflation and see less room for cuts in the benchmark rate for 2016, as political turmoil hobbles efforts to fortify fiscal accounts and avoid a second sovereign downgrade to junk.

Brazil’s Selic rate will be 13 percent at the end of next year, according to the Oct. 23 central bank survey of about 100 analysts. That’s up from the previous week’s estimate of 12.75 percent and marks the third straight week the forecast has risen. Inflation next year will reach 6.22 percent, the analysts said, up from 6.12 percent the previous week.

The outlook for faster inflation appears in the first Focus survey since the central bank altered its monetary policy communique to remove language indicating a goal of slowing consumer price increases to target by year-end 2016. Renewed political friction threatening the government’s fiscal adjustment along with the recession has clouded the outlook for the nation’s credit rating, which Standard & Poor’s downgraded to junk in September.

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