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Brazilian Economy Minister Paulo Guedes speaks at the Planalto Palace, in Brasilia, on Aug. 19, 2020.Adriano Machado/Reuters

Forecasts for Brazil’s growth and inflation in 2021 have risen to new highs, a survey of economists showed on Monday, pushing the outlook for official central bank borrowing costs this year to a fresh peak of 5.75 per cent.

The median forecast for 2021 inflation from more than 100 economists in the central bank’s weekly FOCUS survey rose to 5.3 per cent from 5.2 per cent, well above the bank’s year-end goal of 3.75 per cent and breaching the upper limit of its wider target range at 5.25 per cent.

Following a string of solid economic indicators and recent upward revisions to economists’ forecasts, the median growth forecast for the year rose to a new high of 4 per cent from 3.5 per cent, the survey showed.

Economy Minister Paulo Guedes said last week growth could even reach 5 per cent this year.

The rising growth and inflation forecasts helped trigger a rise in the year-end interest rate outlook to a fresh survey high of 5.75 per cent from 5.50 per cent.

The central bank has raised its benchmark Selic rate by 75 basis points at each of its last two policy meetings, to 3.50 per cent, and has indicated it will do so again next month.

The FOCUS survey’s 2022 median inflation forecast held steady at 3.7 per cent, still above the central bank’s official target of 3.5 per cent.

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