Brazil Central Bank Cuts 2019 Growth Forecast, Sees Tame CPI
(Bloomberg) -- Brazil’s central bank cut its 2019 economic growth forecasts and sees inflation under control, according to its quarterly inflation report published on Thursday.
The economy will grow 2 percent this year, down from policy makers’ previous estimate of 2.4 percent in December.
Still, policy makers cautioned of a challenging international environment and said that a frustration of expectations regarding domestic economic reforms could raise the inflation trajectory.
- Private sector growth estimates have fallen amid weak demand, uneven consumer confidence and high unemployment
- An outlook for weaker expansion, coupled with inflation running below this year’s target of 4.25 percent, prompted analysts to tone down bets of rate increases next year
- The central bank held the benchmark interest rate at its March 20 policy meeting and signaled it could consider lower borrowing costs in the future
- Roberto Campos Neto was sworn in as the institution’s president this month amid heightened political tension that’s prompted local assets to tumble
- In remarks to reporters later on Thursday, Campos Neto said the central bank is following market volatility and will act when it’s necessary. He added that there’s no change to its currency strategy
- The central bank continues to see 2019 inflation at 3.9 percent, the same as it did in its previous report in December
- Policy makers expect consumer price increases of 3.8 percent in 2020 and 3.9 percent in 2021
- "The Copom considers that several measures of underlying inflation are at appropriate or comfortable levels, including the components most sensitive to the economic cycle and monetary policy."
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