Economists say Brazil's monetary tightening cycle is over, survey shows

BRASILIA/SAO PAULO, May 12 (Reuters) - Brazilian economists believe the aggressive monetary tightening cycle in Latin America's largest economy has come to an end, a weekly central bank survey showed on Monday.

The median forecast points to central bank's key interest rate being held at the current 14.75% at the next policy meeting in June. A week earlier, economists had projected a final 25-basis-point hike next month, with the first cut in the benchmark Selic rate coming in December.

The central bank last week raised rates by 50 basis points in a sixth straight hike, bringing borrowing costs to their highest level in nearly 20 years, and left the door open for future steps amid global uncertainties and stubbornly high domestic inflation.

Policymakers also stressed that the current environment calls for a "significantly contractionary monetary policy for a prolonged period" to bring inflation to target, dropping previous language about the need for "a more contractionary" stance.

The poll shows economists trimmed their 2025 inflation forecast for a third consecutive week to 5.51%, still well above the official 3% target, which allows for a tolerance range of 1.5 percentage points in either direction.

The forecast also remains well above the 4.8% inflation rate for this year that was unveiled by the central bank last week.

Projections edged down to 4.50% for 2026 and were kept at 4.0% for 2027 and 3.8% for 2028.

The following is a set of projections from the survey: