UPDATE 1-Brazil's central bank bumps up 2024 economic growth projection

(Adds details from report, context)

BRASILIA, March 28 (Reuters) - Brazil's central bank revised up its projection for economic growth this year to 1.9%, from the 1.7% expected in December, in its quarterly inflation report released on Thursday.

Policymakers highlighted a labor market showing dynamism and stronger wage growth, along with a credit market signaling recovery, evidenced by increased loans and declining interest rates and delinquency rates.

However, the projection remains less optimistic than the government's estimate of a 2.2% gross domestic product (GDP) expansion, which Finance Minister Fernando Haddad said on Wednesday could be revised to above 2.5%.

Private economists surveyed weekly by the central bank expect output to grow by 1.85% this year.

In the report, the central bank raised its forecast for bank lending expansion in 2024 to 9.4% from a previous 8.8%.

On the other hand, it lowered the estimated annual trade surplus to $59 billion from $73 billion "due to the downward revision in the export value projection, reflecting lower prices, particularly in soybeans, given the outlook for robust global supply."

As a result, the central bank now expects a larger current account deficit of $48 billion this year, up from $35 billion.

INFLATION

The central bank acknowledged that consumer prices rose by 0.54 percentage point above its expectations in the three months to February, mainly due to increases in administered prices and home food prices.

It estimated smaller variations in inflation ahead, noting that, excluding seasonal effects, the projection is consistent with a slower pace of disinflation than that observed between 2022 and 2023.

Policymakers emphasized this week that uncertainties around the pace at which inflation will fall, both domestically and abroad, had led them to revise their forward guidance, now anticipating another 50-basis-point reduction for just one meeting ahead, instead of "meetings" in the plural.

Since the beginning of the monetary easing cycle in August, they have cut the benchmark interest rate by a total 300 basis points to 10.75%. (Reporting by Marcela Ayres; editing by Gabriel Araujo)