UPDATE 1-Brazil to cut rates to 7.25 pct this year-survey

Mon Aug 6, 2012 5:24pm IST

* Economists trim forecasts for growth, rates in 2012

* 2012 inflation view up to 5 pct from 4.98 pct

By Silvio Cascione

SAO PAULO, Aug 6 (Reuters) - Weak economic growth will likely prompt Brazil's central bank to cut interest rates deeper than previously expected this year, a weekly central bank survey of economists showed on Monday.

Forecasts for Brazil's benchmark overnight lending rate at end-2012 were down to 7.25 from 7.50 percent one week earlier, according to the poll, which tracks weekly forecasts of the most widely watched indicators in Brazil.

Brazil's benchmark Selic rate is already at an all-time low of 8 percent after eight cuts since August 2011 as policymakers try to jump-start a stagnant economy.

The world's sixth-largest economy will grow only 1.85 percent this year, according to the survey, less than the forecast of 1.9 percent seen one week earlier.

That would be its worst performance since a mild contraction in 2009 in the aftermath of the global credit crisis, and a far cry from the 7.5 percent boom in 2010.

Estimates for inflation in 2012 edged up to 5.00 percent from 4.98 percent, according to the survey. That is still within the central bank target of 4.5 percent plus or minus 2 percentage points.

The poll results are the median forecast of analysts polled by the central bank at about 100 financial institutions.

Consumer prices were seen rising 0.30 percent in July from the previous month, up from 0.26 percent seen a week earlier.

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