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Brazil's central bank cuts 2017 GDP forecast

Banco Central do Brasil lowered its 2017 GDP growth forecast to 0.8% from 1.3% as the central bank said that it expects 2016 to end with a slightly sharper recession than previously thought.

In its latest quarterly inflation report, released Dec. 22, the central bank said that it now expects the country to end with a 3.4% GDP contraction for 2016, which compares to its previously forecast 3.3% decline.

Meanwhile, the regulator projects an inflation rate of 4.4% for 2017 and 3.6% for 2018, below its target of 4.5%. For 2016, the central bank now projects an inflation rate of 6.5%, slower than its previous estimate of 7.3%.

Earlier in the month, the central bank's monetary policy committee said a slower than expected economic recovery could provide more room for cuts in the country's benchmark Selic rate.