Brazil Economists See 2020 Key Rate Cut Even as Growth Picks Up

(Bloomberg) -- Brazil economists raised their 2020 growth forecasts for the second straight week and lowered their key rate estimate for next year to a record low as tame inflation allows the central bank to ease monetary policy.

Latin America’s largest economy will expand by 2.17%, up from the previous forecast of 2.08%, according to a central bank survey published on Monday. Analysts see the benchmark Selic falling to 4.25% by December next year, down from 4.50% before.

Brazil’s central bank, led by its President Roberto Campos Neto, is taking the lead in pumping stimulus into an economy marked by slow growth and tepid inflation. Policy makers have cut borrowing costs in three straight meetings and signaled at least one more reduction is on the horizon. Analysts’ new estimates come just days after the central bank’s GDP proxy showed the economy likely grew in the third quarter, though at a lackluster pace.

Read more: Brazil Economic Activity Gauge Signals Third Quarter Growth

Analysts in the central bank survey kept their 2020 inflation forecasts steady at 3.60%. That’s below next year’s official target of 4%.

To contact the reporter on this story: Mario Sergio Lima in Brasilia Newsroom at mlima11@bloomberg.net

To contact the editors responsible for this story: Juan Pablo Spinetto at jspinetto@bloomberg.net, Matthew Malinowski

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