Brazil Analysts Raise Selic Forecast on Faster Growth

Brazil’s central bank will raise the benchmark interest rate more than previously forecast as Latin America’s biggest economy expands at a faster pace, a central bank survey of about 100 economists published today showed.

For the 14th straight week, analysts increased their forecast for economic growth, according to the survey taken June 18. The economy will grow 7.06 percent this year, up from a week earlier forecast of 6.99 percent, prompting policy makers to raise the Selic to 12 percent by year-end. Analysts in the June 11 survey forecast the rate to reach 11.75 percent this year.

Brazil’s inflation will accelerate to 4.83 percent in the next 12 months, up from a week-earlier forecast of 4.76 percent. Economists left unchanged their forecast for inflation to reach 5.61 percent by the end of this year and 4.8 percent by year-end 2011, the survey showed.

Policy makers target inflation of 4.5 percent plus or minus two percentage points.

Brazil’s economy expanded 9 percent in the first quarter over the same period a year ago, the national statistics agency reported June 8. Growth will slow to 4.5 percent next year, according to today’s survey.

The central bank will raise the Selic rate by another 75 basis points in their July 20-21 meeting to 11 percent from 10.25 percent current, the survey showed.