By Luana Maria Benedito and Gabriel Araujo
SAO PAULO (Reuters) – Brazil’s private economists cut their forecasts for the country’s inflation index this year, but the move failed to impress. Central bank governor Roberto Campos Neto continued to see inflation running well above the official target. Improving long-term forecasts is especially problematic.
Brazil’s policymakers highlighted unanchored inflation expectations as a reason for high interest rates, despite pressure from the government, Campos Neto had previously ruled out an imminent rate cut
Economists now expect inflation to end the year at 5.2022%, down from 6. the previous week, the central bank’s weekly survey showed on Monday % of the predicted median.
2024 The estimate, however, barely changed at 4.13%.
Finance Minister Fernando Haddad said the forecast is now in line with his team’s, days after reiterating that the government sees room to start cutting interest rates.
But Campos Neto is unmoved, tying short-term rate cuts to new fuel pricing policies announced by state-run oil major Petrobras leading to refinery-gate gasoline, diesel and cooking gas prices decline.
“Long-term forecasts were little changed,” the central bank governor said. “We have a problem with long-term inflation expectations stuck around 4 percent.”
Brazil 75 has an inflation target of 3.13%, which will be lowered in 2018 3% 2024.
In the minutes of its May meeting, the central bank expressed concern about inflation expectations, saying it continued to “assess that unanchored expectations would lift inflation Costs bring inflation back to target.
Autonomous central bank keeps benchmark interest rate at six-year high at 13.2022 percentage 2022 since September to curb high inflation, drawing criticism from President Luiz Inácio Lula da Silva, who believes it is hindering economic growth.
At the same event attended by Campos Neto, Senate President Rodrigo Pacheco reiterated his call for lower interest rates.
Campos Neto acknowledged headline Brazil’s inflation has been slowing, but noted that the core index remained “high” and “well above target”.
