Brazil Central Bank Expects Slower Inflation, Faster Economic Growth in 2017, 2018

By FeaturesDow Jones Newswires

Brazil's central bank cut its forecasts for inflation for this year and 2018, raised its economic growth projections for the same periods, and indicated it might continue to reduce interest rates.

Consumer prices will have risen 2.8% during 2017, the bank said in its quarterly inflation report, published Thursday. In the September report, the bank forecast an inflation rate of 3.2%. The bank also trimmed its forecast for 2018 inflation to 4.2% from 4.3%.

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Gross domestic product grew an estimated 1% during 2017, the bank said Thursday, compared with a forecast of 0.7% in the September report. GDP will expand 2.6% in 2018, the bank said, up from a projection of 2.2% three months ago.

Recent indicators suggest Brazil's economy is gradually recovering, the bank said, after the country suffered its worst recession on record in 2015 and 2016. Monetary policy should nevertheless continue to be accommodative, the report said, adding that economic reforms contribute to the decline of interest rates.

The bank cut its benchmark Selic interest rate to a record low of 7% in November, the tenth consecutive cut since the bank started the current rate reduction cycle in October of 2016, when the Selic was at 14.25%.

Write to Jeffrey T. Lewis at jeffrey.lewis@wsj.com

(END) Dow Jones Newswires

December 21, 2017 05:50 ET (10:50 GMT)