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Brazil Analysts Boost 2015 CPI, Cut GDP for Ninth Straight Week

Brazil Analysts Boost 2015 CPI, Cut GDP for Ninth Straight Week

Posted by Diego Hidalgo on March 03, 2015

(Bloomberg) -- Brazil economists for the ninth straight week raised their forecast for 2015 inflation and cut their forecast for economic growth, as the central bank continues to raise rates in the world’s second-biggest emerging market. 

Analysts lifted their 2015 inflation forecast to 7.47 percent, from 7.33 percent estimated the previous week, and cut their gross domestic product call to a decline of 0.58 percent from negative 0.5 percent, according to the Feb. 27 central bank survey of about 100 analysts published today. The economists also raised their forecast for the benchmark rate at year-end, to 13 percent from 12.75 percent. 

Brazil risks recession with the government tightening both fiscal and monetary policies. Inflation continues to accelerate as the government raises prices for regulated items including electricity. The increasingly bleak outlook for stagflation in 2015 has depressed both consumer and business confidence. 

 

Brazil’s inflation in the year through mid-February accelerated to 7.36 percent from 6.69 percent the previous month, the national statistics agency said, the fastest pace in nearly a decade. The central bank targets annual inflation of 4.5 percent, plus or minus two percentage points. 

With inflation quickening, monetary policy makers last month raised the benchmark interest rate a half-point to 12.25 percent. Traders are expecting another half-point increase at this week’s meeting, according to data compiled by Bloomberg. 

Consumer confidence as measured by the Getulio Vargas Foundation fell in February to its lowest level on record. Business confidence as measured by the National Industry Confederation did the same.

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