Brazil inflation and growth forecasts hit new highs: survey

BRASILIA: Forecasts for Brazil's growth and inflation in 2021 have risen to new highs, a survey of economists showed on Monday, pushing the outlook for official central bank borrowing costs this year to a fresh peak of 5.75%.

The median forecast for 2021 inflation from more than 100 economists in the central bank's weekly FOCUS survey rose to 5.3% from 5.2%, well above the bank's year-end goal of 3.75% and breaching the upper limit of its wider target range at 5.25%.

Following a string of solid economic indicators and recent upward revisions to economists' forecasts, the median growth forecast for the year rose to a new high of 4% from 3.5%, the survey showed.

Economy Minister Paulo Guedes said last week growth could even reach 5% this year.

The rising growth and inflation forecasts helped trigger a rise in the year-end interest rate outlook to a fresh survey high of 5.75% from 5.50%.

The central bank has raised its benchmark Selic rate by 75 basis points at each of its last two policy meetings, to 3.50%, and has indicated it will do so again next month.

The FOCUS survey's 2022 median inflation forecast held steady at 3.7%, still above the central bank's official target of 3.5%.