February 10, 2020 / 12:33 PM / 17 days ago

Brazil 2020 inflation outlook slumps to new low 3.25% - cenbank survey

BRASILIA, Feb 10 (Reuters) - Inflation expectations in Brazil continue to fall, a central bank survey of economists showed on Monday, with this year’s forecast cut to 3.25%, a new low and even further below the central bank’s official target of 4.00%.

The sharp reduction comes despite the Brazilian currency’s relentless slide to fresh depths against the U.S. dollar and the central bank cutting interest rates last week to an all-time low of 4.25%.

This is the sixth week in a row the average 2020 inflation forecast from around 100 economists polled in the bank’s ‘FOCUS’ survey has fallen. At the start of the year, it stood at an above-target 4.13%.

The 2021 inflation outlook remained steady at 3.75%, right on the central bank’s official target for next year, although the average forecast for the real’s exchange rate next year fell for the second week in a row, to 4.10 per dollar from 4.05.

On Friday, the real hit a record low of 4.3234 per dollar . Its 7% depreciation so far this year, however, does not seem to be affecting inflation expectations for next year, the FOCUS survey shows.

The FOCUS survey also showed economists lowering their end-2021 interest rate forecast to 6.00% from 6.25% the week before. (Reporting by Jamie McGeever; Editing by Alex Richardson and Chizu Nomiyama)

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