Dec. 26 (Bloomberg) -- Brazilian economists for a third straight week lowered their estimate for the benchmark interest rate at the end of 2006 on expectations that slowing inflation will give the central bank more room to ease borrowing costs.

Policy makers will trim the benchmark lending rate, the highest among the 45 central banks tracked by Bloomberg, to 15 percent by the end of next year from 18 percent now, according to the median estimate in a weekly central bank survey of about 100 economists taken Dec. 23 and published today. The median forecast fell from 15.25 a week earlier and 15.5 on Dec. 2.

Inflation will keep slowing in 2006 as a rally in the currency drives down the price of imported goods, said Solange Srour, an economist with Mellon Global Investments in Rio de Janeiro. The annual inflation rate fell to 5.9 percent through mid-December from 8.1 percent in April.

``The decline in inflation has a lot to do with the currency,'' Srour said in a telephone interview from Rio de Janeiro. ``This effect will likely persist next year.''

Srour said the central bank may cut the benchmark rate to as low as 14.5 percent by the end of next year to shore up growth in Latin America's biggest economy.

Brazil's currency has risen 15 percent over the past 12 months, the biggest gain among the 60 currencies Bloomberg tracks against the dollar. It has weakened more than 7 percent from a four-year high on Nov. 11 after the central bank stepped up sales of reais for U.S. dollars and sales of contracts that guard against the currency's appreciation.

Growth Forecasts

The real may fall to between 2.4 reais and 2.5 reais per dollar by the end of next year, a level that would still help keep inflation in check, Srour said. It dropped 0.4 percent today to 2.325 reais per dollar at 9:36 a.m. New York time.

Policy makers have brought the benchmark lending rate down 1.75 percentage point over the past four months from a two-year high in September in bid to revive a slumping economy. They are scheduled to meet next on Jan. 17-18 to set the benchmark rate.

Brazil's economy grew 1 percent in the third quarter from a year earlier, the slowest pace in almost two years, after an increase of 3.75 percentage points in the benchmark rate over the nine months through May discouraged spending by consumers and companies.

The economy will expand 2.48 percent this year and 3.5 percent in 2006, according to the median estimates in the central bank survey published today. Last year, the economy grew 4.9 percent, the fastest in a decade.