December 8, 2013
‘Inflation to keep increasing’
Brazil central bank sees slower GDP growth
BRASILIA — Inflation in Brazil will remain stubbornly high well into 2015 even as the economy struggles to gain steam, the Central Bank said yesterday, raising market bets for higher borrowing costs in the future.
In its quarterly inflation report, the bank lowered its 2013 inflation forecast to 5.8 percent from 6 percent previously. However, it revised its inflation view for 2014 to 5.7 percent from 5.4 percent previously and said it expects inflation at 5.5 percent in the third quarter of 2015.
The bank also revised down its estimate for economic growth to 2.5 percent for this year from a previous 2.7 percent forecast. The bank sees growth keeping that pace until the second quarter of 2014.
The projections for quickening inflation sparked a rally in the Brazilian currency, the real, as well as interest-rate futures as investors increased bets on a longer monetary tightening cycle that would bring more US dollars into the economy.