Brazil Economists See Faster Inflation, Higher Key Rate in 2022

(Bloomberg) -- Brazil analysts raised their forecasts for inflation and the key interest rate for 2022 as rising fuel costs and resurgent demand for services and products stoke prices in the aftermath of the pandemic. 

Policy makers led by Roberto Campos Neto will raise the Selic to 8.75% by the end of next year, above the previous estimate of 8.5%, according to a central bank survey published on Monday. Inflation is expected to end 2022 at 4.14%, up from the previous forecast of 4.12%. 

Brazil’s consumer prices rose 10.25% in September from a year ago, breaking double digits for the first since 2016. While Campos Neto has said inflation probably peaked last month, he added that an increase in domestic fuel prices announced by state-owned oil company Petrobras on Friday would likely add to inflation expectations.

Read More: Latin America’s Surging Prices Spell Hard Work for Central Banks

The central bank has lifted borrowing costs by 425 basis points since March, and signaled another full-percentage point hike is on tap later this month.

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