By Alexander Ragir – Oct 4, 2011
JPMorgan Chase & Co. (JPM) cut its forecast for Brazil’s economic growth and said it expects the central bank to cut interest rates more than it previously expected as global financial turmoil weighs on confidence in Latin America’s biggest economy,
The bank, in an e-mailed report, said it expects policy makers to reduce the benchmark interest rate to 10.5 percent by January from its current 12 percent. Previously the bank expected the so-called Selic rate to fall to 11 percent in January.
Latin America’s biggest economy should grow 2.3 percent in the second half of the year, less than a 3.1 percent forecast made Aug. 8, JPMorgan analysts wrote in the report. The economy next year should expand 3.4 percent instead of a previous 3.8 percent forecast.
“Domestic growth prospects for next year still seems cushioned by a more preemptive monetary policy response and the buffers from fiscal and quasi fiscal policies,” JPMorgan analysts including Fabio Akira wrote in today’s report.
The currency will end the year at 1.80 per U.S. dollar, compared with the previous forecast of 1.70, JPMorgan said.