UPDATE 2-Brazil to hit inflation target if rate cuts start in June, central bank chief says

(Recasts with comments on monetary policy after news conference)

By Marcela Ayres

BRASILIA, Sept 29 (Reuters) - Brazil's central bank expects to hit its inflation target based on calculations, including a market forecast for interest rate cuts beginning next June, central bank chief Roberto Campos Neto said on Thursday.

Policymakers have said rates will stay high for a "sufficiently long period" to bring inflation down to around the target over the central bank's policy horizon, which includes 2023 and, to a lesser extent, 2024.

The central bank's inflation target is 3.25% for 2023 and 3.00% for 2024. Inflation in Brazil is currently running at an annualized rate of about 8%.

Discussing the central bank's quarterly inflation report at a news conference, Campos Neto flagged that its weekly survey of private economists points to a first rate cut in June. Under that scenario, he said, "we show that we achieve our goals."

Still, Campos Neto said it is too early to think about monetary easing. Last week, the central bank decided to pause an aggressive tightening cycle after 12 straight increases lifted the benchmark rate to 13.75% from a record-low 2% in March 2021.

The central bank has stressed that it will remain vigilant and not hesitate to resume the rate hikes if disinflation does not happen as expected.

The central bank's inflation report also boosted the growth outlook for 2022 to 2.7% from 1.7% previously, based on better-than-expected activity in the second quarter, along with fiscal stimulus that has not yet been reflected in growth figures.

Policymakers said they were looking into the impact of a larger welfare program for low-income families through December, along with tax cuts on fuel and energy.

Congress passed both measures in the run-up to next month's presidential election, in which far-right President Jair Bolsonaro is trailing former President Luiz Inacio Lula da Silva, a leftist.

The central bank also predicted that Latin America's largest economy will expand by 1.0% in 2023, as domestic demand cools alongside a global slowdown and high borrowing costs in Brazil. (Reporting by Marcela Ayres Editing by Brad Haynes, Steven Grattan and Paul Simao)