Brazil analysts hold 2011, 2012 inflation forecasts

SAO PAULO: Economists held their forecasts for inflation this year and next in Brazil from last week, according to a weekly central bank survey published on Monday, although analysts still saw interest-rate increases ahead.

Local analysts saw inflation this year at 6.31 percent and next year at 5.2 percent -- the same as their previous forecasts.

They also held their forecast for the benchmark Selic lending rate at 12.75 percent for the end of the year, which would mean another 50 basis points in rate hikes from the current 12.25 percent.

At least part of that expected rate increase could come as soon as this week, when central bank policy-makers meet. All 21 analysts in a Reuters survey saw the bank lifting the Selic to 12.50 percent at the end of the meeting.

The central bank has already raised the Selic by 150 basis points this year from an original 10.75 percent in a bid to contain inflation.

But the 12-month IPCA price index has sped above the central bank's target -- set this year at 4.5 percent plus or minus 2 percentage points -- for three months in a row.

Economists forecast growth of 3.94 percent in Latin America's biggest economy this year, the same as last week.

Brazil's economy grew 7.5 percent last year, the fastest in 24 years and one of the most robust rates among major economies. But growth is expected to slow to a more sustainable pace this year.

The survey's predictions represent the median forecast of analysts polled by the central bank at about 100 financial institutions.

Copyright Reuters, 2011