World Economy

Brazil CPI Outlook to Rise

Brazil CPI Outlook to Rise  Brazil CPI Outlook to Rise

Economists have increased their inflation outlook for Brazil for this year and next, a central bank survey showed Monday, as the monetary authority suggested it is likely to keep its benchmark interest rate unchanged this year.

Brazil’s official consumer-price index, the IPCA, is expected to end 2016 up 7.26%, according to a weekly central bank survey of 100 economists, compared with expectations of a 7.23% rise a week ago. It was the fifth straight week that the index was projected to increase, Nasdaq reported.

The decision to keep the base rate unchanged surprised most economists, who are expecting a rate increase as inflation remains well above the central bank’s 4.5% inflation target for the year, which includes a tolerance band of between 2.5% and 6.5%.

Economists also raised their inflation forecasts for 2017 to 5.80% from 5.65% in the previous week.

According to the central bank survey, economists reduced their outlook for the Selic rate for the year-end to 14.25% from 14.84% in last week’s survey. They also cut their view for next year to 13% from 13.16%.

Meanwhile, Brazil’s gross domestic product is expected to shrink 3.01% in 2016, compared with expectations a week ago of a 3% contraction. For 2017, the economists now expect the economy to expand by 0.70%, compared with an expectation of 0.80% growth the previous week’s survey.

They expect Brazil to post a $37.90 billion trade surplus this year, up from the $37.45 billion expected in the previous week’s survey.