Brazil economists see smaller start to easing cycle amid oil shock

SAO PAULO, March 16 (Reuters) - Brazilian economists surveyed weekly by the central bank expect a more modest start to a monetary easing cycle this week following recent developments in the U.S.-Israel conflict with Iran, the so-called Focus poll showed on Monday.

They now forecast the monetary authority to deliver a 25-basis-point rate cut on Wednesday, marking a shift from expectations of an initial 50-basis-point cut - which had been in place since last year.

* Policymakers signaled in January they would begin lowering borrowing costs at their March 17-18 meeting if the expected scenario materialized.

* They have kept the benchmark Selic rate at 15% since July in an effort to steer annual inflation, which reached 3.81% in February, toward the 3% target.

* Since January, however, a surge in oil prices driven by geopolitical tensions and the resulting inflationary risks have clouded the outlook.

* Economists now expect the Selic rate to end 2026 at 12.25%, up from a median forecast of 12.13% the previous week.

* The revision comes alongside a higher inflation outlook, with consumer prices now seen rising 4.10% this year, compared with a prior 3.91% estimate.

* Inflation projections for subsequent years were kept unchanged at 3.8% for 2027 and 3.5% for both 2028 and 2029.

* In recent days, market pricing in the interest-rate futures curve had already shown rising bets on a 25-basis-point cut. (Reporting by Camila Moreira; Writing by Marcela Ayres; Editing by Gabriel Araujo)