Economists expect rate cut in Brazil in December, central bank poll shows

BRASILIA/SAO PAULO, May 5 (Reuters) - Private economists polled by Brazil's central bank expect monetary easing to start at the end of 2025, even as policymakers continue their current tightening cycle, according to the weekly survey released on Monday.

Markets still expect a 50-basis-point rate hike on Wednesday, followed by a final 25-basis-point increase in June, which would take the central bank's benchmark Selic interest rate to a peak of 15% as authorities seek to curb inflation.

But the median forecast now points to the central bank cutting its key rate by 25 basis points to 14.75% in December, breaking a 16-week stretch in which rates were expected to remain unchanged from June through the end of this year.

The survey also showed that private economists have slightly lowered their inflation forecast for this year.

Economists now expect the benchmark IPCA consumer price index to end 2025 at 5.53%, down from a forecast of 5.55% in the previous week, marking a third consecutive weekly decline.

The projection, however, remains well above the central bank's official inflation target of 3%, with a tolerance band of 1.5 percentage points in either direction.

For 2026 and 2027, inflation expectations held steady at 4.51% and 4.00%, respectively, according to the poll.

The inflation forecast for 2028 ticked up slightly to 3.8%, highlighting a significant de-anchoring of longer-term expectations - a source of deep concern previously flagged by the central bank.

The following provides a set of projections from the survey: