Brazil inflation to ease further this year, Lula tells Congress

SAO PAULO (Reuters) - Inflation in Brazil is expected to ease further this year and near the mid-point of the central bank's 3% target by mid-2026, President Luiz Inacio Lula da Silva said in a written message to Congress on Monday.

"In 2025, the reduction in inflation should continue, supported by the more positive performance expected for the grain harvest, electricity tariffs and fuels," his message read.

The slowdown in prices will benefit from the increase in the interest rate differential between Brazil and other economies, which should help with exchange-rate dynamics, according to the document.

Last week, Brazil's central bank hiked interest rates by 100 basis points and signaled another increase in March. On Monday, the Brazilian real set its longest streak of gains versus the U.S. dollar in 20 years.

The Brazilian government's spending review would continue in 2025 and not deviate from the commitment to the "structural construction of fiscal robustness," Lula's message read.

(Reporting by Lisandra Paraguassu and Maria Carolina Marcello; Writing by Isabel Teles; Editing by Kylie Madry)

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