MONDAY, MAY 26, 2014

SAO PAULO–The Brazilian central bank is expected to end its year-long cycle of interest rate increases amid tepid economic activity and after signals from the monetary authority that it intends to wait to see delayed effects of the rate hikes to date.

Fourteen of 16 economists and analysts surveyed by The Wall Street Journal predicted the central bank’s monetary policy committee, known as the Copom, will keep its benchmark Selic rate unchanged after its meeting ends Wednesday, while just two expect the bank to hike the rate a quarter point.

The central bank has raised the Selic rate nine times over the past year, from a record low of 7.25% to the current level of 11%.

Central bank President Alexandre Tombini said recently that the year-long process of raising interest rates is having a delayed effect on inflation, and that consumer price increases should start to slow in coming months.

“The effects of those increases are cumulative,” said Mr. Tombini at a recent lunch organized by the Brazil-Israel Chamber of Commerce.

The most recently released inflation index, the IPCA-15, rose 0.58% compared with a 0.78% climb in the month through mid-April, the Brazilian Geographic and Statistics Institute, or IBGE, said last week. The most recent 12-month reading for the IPCA, in April, was 6.3%.

Sluggish economic activity so far this year, combined with a presidential election in October, will also encourage the central bank to stop raising rates, analysts said.

“Economic activity is very timid and the central bank will take this into account now, mainly because this year we have a presidential election and the monetary authority wants to avoid more damage,” said Newton Rosa, an economist at SulAmerica Investimento, based in Sao Paulo.

Brazil reported a drop in economic growth in March compared with February, as retail sales and industrial production were down in the period, pointing to another mediocre performance for Latin America’s largest economy.

The Brazilian central bank’s economic activity index, or IBC-Br, fell 0.11% in March from the previous month on a seasonally adjusted basis. Growth was up 2.11% in the latest 12-month period, according to the index, which was published Friday.

Brazil’s presidential election is set for Oct. 5, with a second round, if needed, scheduled for Oct. 26.

So far, President Dilma Rousseff is favored to win, but recent polls shows that her main contenders Aecio Neves of the Brazilian Social Democracy Party, or PSDB, and Eduardo Campos of the Brazilian Socialist Party, or PSB, are gaining ground.