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Brazil analysts again lower 2016 key rate forecast

Bnamericas Published: Monday, February 01, 2016
Brazil analysts again lower 2016 key rate forecast

Analysts surveyed for the Brazilian central bank's latest weekly report again revised down their 2016 forecast for the benchmark Selic rate.

This time it went down to 14.25%, the same rate the monetary policy committee decided to keep in late January.

Last week's key interest rate prediction was 14.64% and last month's was 15.25%. For 2017, the forecast was maintained at 12.75%.

Projections for inflation continue to rise, with the 2016 CPI now expected to reach 7.26% compared to 7.23% a week ago and 6.87% a month prior. Analysts' full year inflation prediction for 2017 increased to 5.80%, up from 5.65% the week before and 5.20% a month ago.

Brazil's CPI was 9.01% last year.

GDP AND OTHER INDICATORS

The 2016 GDP forecast dipped slightly to a 3.01% contraction, compared to contractions of 3.00% and 2.95% that were forecast a week and a month ago. For 2017, analysts expect growth of 0.70% compared to 0.80% last week and 1.00% last month. Brazil's GDP shrunk by a record 4.5% year-on-year y in 3Q15.

The analysts see the exchange rate appreciating this year to 4.35 reais per US dollar, up from last week's forecast of 4.30 reais and 4.21 reais a month ago. Projections for 2017 remained stable at 4.40 reais per US dollar.

The same analysts expect Brazil's 2016 trade surplus to be US$37.9bn compared to the previous week's forecast of US$37.5bn and US$35.0bn the month before. For 2017, the forecast was unchanged at US$40.0bn.

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