However, despite the cuts, expectations for medium-term inflation still remain above the target of the sister country’s central bank, which is 3%.
Economic analysts in Brazil adjusted their projections on interest rates for 2024 after the central bank ratified its strategy of maintaining monetary easing in the coming months.
According to a weekly survey carried out by central bank economists and cited by the Bloomberg agency, it is estimated that the Selic rate will fall to 9% by December 2024, compared to the previous forecast of 9.25%. Additionally, borrowing costs are projected to decline to 8.5% by the end of 2025, the report reveals.
Policymakers, led by Roberto Campos Neto, cut rates to 11.75% this month and plan to make more gradual cuts through next year. The downward trend in headline inflation and measures of consumer price growth, which exclude volatile items such as energy and food, are showing a slowdown.
Inflation: what’s coming
However, despite the cuts, expectations for medium-term inflation still remain above the bank’s target of 3% for 2024, with analysts forecasting a rise of 3.91% next year.
In their quarterly inflation report released at the end of December, policymakers lower their economic growth forecast for 2024 to 1.7% from 1.8% previously.
This decline projects a moderation in the agricultural sector and consumption, pointing to an impact on family income due to the loss of momentum caused by lower food prices and increased government spending.
As for the country’s fiscal outlook, it remains uncertain as Economy Minister Fernando Haddad negotiates with Congress a series of bills aimed at increasing revenue to finance the president’s social and infrastructure programs. Luiz Inacio Lula da Silva.
Source: Ambito
