Brazil analysts lowered their inflation estimates from this year through 2026 after central bankers pointed to a “clearer” outlook on consumer prices.
(Bloomberg) — Brazil analysts lowered their inflation estimates from this year through 2026 after central bankers pointed to a “clearer” outlook on consumer prices.
Annual inflation will end this year at 5.42%, down for the fourth straight week and lower than the prior estimate of 5.69%, according to a weekly central bank survey of economists published on Monday. Analysts also cut their consumer-price forecasts to 4.04% in 2024, 3.9% in 2025 and 3.88% in 2026.
Policymakers are heading to their rate-setting meeting next week with a “clearer” inflation outlook, according to bank chief Roberto Campos Neto. Annual inflation continued to ease back within their tolerance range, to 3.94% in May, as core measures stripping out energy and food prices slowed. Traders extended their bets on an easing cycle beginning in August, as most analysts see borrowing costs falling to 12.5% in December and 10% by year-end 2024.
Read More: Brazil Inflation Slows Past All Forecasts as Rate Cuts Loom
Still, estimates for consumer price increases remain above the central bank’s goals of 3.25% for this year and 3% in 2024 and 2025. A meeting to set the target for 2026 is scheduled this month, and can be crucial to bring down analysts’ estimates, according to a JPMorgan & Chase Co. research note.
“A change to the midpoint of the target could permanently un-anchor inflation expectations, hindering structural disinflation,” analysts led by Cassiana Fernandez wrote in the note.
Congress began discussions on a tax reform while the Senate is expected to vote on a bill shoring up public finances amid expectations from President Luiz Inacio Lula da Silva’s government that the proposals will help lower interest rates.
Lula, who has publicly criticized current monetary policy, nominated two directors to the central bank board who will appear in a Senate hearing later this month.
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