UPDATE 1-Brazil analysts cut inflation estimate for 2010

* Cut in IPCA estimate is 2nd in three weeks

* Inflation index stood unchanged in June

* Economists cut year-end interest rate forecast
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SAO PAULO, July 12 (BestGrowthStock) – Economists in a weekly
central bank survey cut their forecasts for Brazil’s benchmark
consumer price index in 2010, after inflation slowed to a halt
in June and economic activity began to show signs of
decelerating.

Economists surveyed by the central bank in the week through
July 9 forecast the benchmark IPCA inflation index (BRCPI=ECI: )
at 5.45 percent by year-end, compared with a prior estimate of
5.55 percent in the previous week, the bank said in its Focus
weekly survey.

The benchmark Selic interest rate, or the cost of borrowing
to which most loans are pegged in Latin America’s largest
economy, should reach 12 percent by December, retreating to
11.75 percent by the end of 2011, the survey showed. In the
week ended on July 2, analysts were predicting the Selic at
12.13 percent by year-end.

The reduction comes days after the government reported that
a tumble in food prices helped offset increases in housing and
personal care costs, keeping inflation flat. Stable price
expectations could prevent the central bank from hiking
borrowing costs to head off accelerating inflation.

Other data, including the use of factory capacity, have
shown signs of economic activity losing momentum, indicating
that a recent surge in prices might probably be contained.

Last week, the National Confederation of Industrialists, an
industry group for the manufacturing sector, said the factory
capacity utilization rate fell to 82.3 percent in May from from
82.8 percent in April on a seasonally-adjusted basis.

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Snap analysis on June’s inflation halt: [ID:nN07145226]

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The Selic currently stands at 10.25 percent. Policy-makers
have raised the rate by 1.5 percentage points so far this year
from a record-low 8.75 percent.

For 2011, the estimates were kept at 4.8 percent for the
13th week in a row. The central bank has a 4.5 percent
inflation target for 2010 and 2011, plus or minus 2 percentage
points.

The economists expect Brazil’s economy to expand 7.2
percent this year, the same as last week’s survey. That could
be the economy’s fastest growth rate in at least 14 years.

As a result, economists have also been increasing their
estimates for the current account deficit this year to $47.2
billion from $47 billion in the prior week. A higher shortfall
indicates the economy is growing above trend and is
increasingly dependent on imports and services from overseas to
keep the pace.

(Reporting by Guillermo Parra-Bernal and Vanessa Stelzer,
Editing by Chizu Nomiyama)

UPDATE 1-Brazil analysts cut inflation estimate for 2010