Halister News

(Bloomberg) -- Santander revised forecasts for the Selic rate to 7.0% from 7.5% for the end of 2017 and to 6.75% from 7.5% for the end of 2018, according to a report signed by Mauricio Molan. 

• “These will be the lowest levels ever recorded for the Selic since its March 1999 inception”
  • “From a longer-term retrospective, this should result in the lowest interbank overnight rate in 60 years, according to our forecasts”
• Low and stable inflation suggests that it will be possible to maintain Selic rate close to forecast for quite some time, at least until mid-2019
• Molan higlights that is important to remain focused on rebalancing fiscal accounts, as fiscal adjustment is a necessary condition for Brazil to keep rates in single digits
  • “In our view, an expansionary fiscal policy was probably the main cause of a process that ended up in hyperinflation and abnormal interest rates in the second half of last century”
• Molan also raised Brazil’s GDP forecasts to 0.8% from 0.5% in 2017 and to 3.2% from 2.5% in 2018

To contact the reporter on this story: Leonardo Lara in Sao Paulo at llara1@bloomberg.net To contact the editors responsible for this story: Daniela Milanese at dmilanese@bloomberg.net Giulia Camillo