UPDATE 2-Brazil economists raise 2010 IPCA, GDP forecasts

* 2010 inflation forecast raised for 14th straight week

* Economists also raise Selic rate forecast, GDP

* Yields on short-term rate futures contracts rise
(Adds interest rate futures, comments)

SAO PAULO, April 26 (BestGrowthStock) – Economists in a weekly
central bank survey in Brazil raised their forecasts for the
benchmark inflation index for economic growth and borrowing
costs in 2010, underscoring concerns Latin America’s largest
economy may be overheating.

Economists see the benchmark IPCA inflation index at 5.41
percent in 2010, compared with the 5.32 percent forecast a week
earlier, according to a central bank weekly released on
Monday.

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

“The fact 2011 expectations didn’t increase is certainly a
positive development,” said Benito Berber, a Latin America
economist at RBS Securities, in a note to clients.

“However, overall, the fact that all measures of inflation
expectations are above the 4.5 percent target has effectively
reduced the (central bank’s) degrees of freedom to start the
tightening cycle at increments less than 75 basis points.”

Yields on Brazilian interest rate futures contracts
(0#DIJ:: ) were mixed, with short-term contracts rising as
investors bet on more aggressive rate hikes at the beginning of
an expected monetary tightening cycle. Yields on long-term
contracts eased.

The yield on the contract due January 2011 (DIJF1: ) rose to
11.79 percent from 11.73 percent on Friday, while the yield on
the contract due July 2010 (DIJN0: ) climbed to 9.5 percent from
9.44 percent.

The IPCA forecasts were raised for a 14th straight week as
expectations for a consumer-fueled economic rebound pressures
consumer prices. Brazil’s gross domestic product is expected to
expand 6 percent in 2010, up from a forecast for 5.81 percent
growth a week earlier, the survey showed.

Economists also raised estimates for the benchmark Selic
interest rate at the end of 2010 to 11.75 percent from 11.5
percent a week earlier.

Stock Today

(Reporting by Elzio Barreto, Editing by Chizu Nomiyama)

UPDATE 2-Brazil economists raise 2010 IPCA, GDP forecasts