Brazil economists trim end-2026 interest rate forecast after seven months

BRASILIA (Reuters) -Brazilian economists cut their outlook for interest rates at the end of 2026 after more than seven months of steady forecasts, a weekly central bank survey showed on Monday, days before the next policy decision.

The median estimate from more than 100 respondents now puts the benchmark Selic rate at 12.38% at the end of next year, down from 12.50% previously, a projection that had not shifted for 32 weeks.

The Selic currently stands at 15%, its highest level in nearly two decades, and is expected to be left there on Wednesday, in line with policymakers' guidance for steady rates over an extended period to rein in inflation that has long run above the 3% official target.

Survey participants expect rates to stay at 15% through the central bank's final rate-setting meeting of this year in December, with cuts beginning in January and continuing through 2026.

The interest-rate path outlined in the weekly survey is used by policymakers as an input for their inflation forecasts. The central bank will release its updated projections alongside Wednesday's policy decision.

At their last meeting in July, policymakers estimated inflation of 4.9% this year and 3.6% in 2026.

In Monday's weekly poll, private economists, who have been steadily lowering their forecasts for both horizons, projected inflation of 4.83% this year and 4.30% in 2026.

(Reporting by Marcela Ayres; Editing by Kirsten Donovan)

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