Economists cut Brazil 2013 GDP growth view to 3.1%

Economists trimmed their forecasts for Brazil's economic expansion this year for the fourth straight week to 3.10 percent, a weekly central bank survey showed today.

The median forecasts in the central bank poll of nearly 100 economists also showed a slight upward revision in 2013 inflation forecasts, to 5.67 percent from 5.65 previously. The survey results add to evidence of a deteriorating trade-off for the central bank, which slashed interest rates to a record low last year but has failed to quickly revive economic growth and has seen inflation expectations drift higher.

The government targets inflation at 4.5 percent, with a tolerance margin of 2 percentage points in either direction. Brazil's economy was seen having grown 0.95 percent last year, according to the median forecast in the poll.

In the minutes of its latest monetary policy meeting, released last week, the central bank said the economic recovery has been surprisingly slow because of supply bottlenecks, which can not be addressed with monetary policy measures.

That was seen by investors as a clear sign that further rate cuts are unlikely, even if the economy continues to post weaker-than-expected economic growth.

Economists kept their year-end estimates for the level of the benchmark overnight lending Selic rate at 7.25 percent for the eleventh straight week.

The central bank survey also showed an upward revision in forecasts for the monthly inflation rate in January, to 0.85 percent from 0.81 percent previously. Brazil's statistics agency IBGE releases the January data for its IPCA inflation gauge on February 7.

According to the survey, economic growth in 2014 should accelerate to 3.65 percent, slightly up a previous forecast of 3.60 percent. Inflation estimates for 2014 remained stable at 5.50 percent for an eleventh consecutive week.