Brazil interest rates to hit 7.00% this year -cenbank survey

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BRASILIA, July 26 (Reuters) - Expectations for 2021 Brazilian inflation and interest rates rose to new highs, a survey of economists showed on Monday, with the central bank's benchmark Selic rate expected to hit 7.00% by the end of the year.

The median 2021 Selic forecast in the central bank's weekly 'FOCUS' survey of over 100 economists rose from 6.75% the week before, as policymakers are seen tightening more aggressively to prevent 2022 inflation expectations running away.

That was the third consecutive increase, indicating a growing belief that the central bank will raise the benchmark further beyond the so-called 'neutral' rate, widely considered to be around 6.00%-6.50% earlier than previously thought.

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Next year's median Selic forecast held steady at 7.00%, the survey showed.

The central bank has raised borrowing costs to 4.25% this year, and is expected to raise it by at least another 75 basis points on Aug. 4.

The FOCUS survey also showed that the median 2021 inflation forecast rose for a 16th week to 6.6% from 6.3%, significantly above the bank's year-end goal of 3.75% and more than a percentage point above the 5.25% upper limit of its wider range.

Next year's inflation outlook inched up to 3.8% from 3.75%, the survey showed, creeping further above the central bank's goal of 3.50%.

The FOCUS survey showed that this year's growth outlook held steady at 5.3%.

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Reporting by Jamie McGeever Editing by Tomasz Janowski Editing by

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