Brazil’s inflation likely to drop below 5 percent in mid-February -poll

Brazil’s inflation rate probably eased below 5 percent in mid-February for the first time since 2012, a poll showed, putting the central bank very close to its long-missed target and keeping the door wide open for interest rate cuts.

Consumer prices as measured by the IPCA-15 inflation index probably rose 4.99 percent in the 12 months through mid-February, down nearly 1 percentage point from mid-January, according to the median of 25 estimates.

Prices probably rose 0.50 percent from mid-January, up from an increase of 0.31 percent in the previous month, according to the median of 29 forecasts in the poll.

The numbers will be released on February 22nd, the same day the central bank is expected to slash interest rates by another 75 basis points to a two-year low of 12.25 percent, according to a separate poll.

Falling inflation and interest rates are expected to help the economy pull through its two-year-long recession. That would bring relief for President Michel Temer, who is working to garner support for austerity measures in Congress.

The central bank’s inflation target is 4.5 percent. With consumer prices slowing more rapidly than expected, most economists expect the government to reduce the goal for 2019, according to a Reuters poll last week.

Source: Reuters Brazil