UPDATE 2-Brazil central bank sees faster 2010 inflation
Wed Mar 31, 2010 2:39pm EDT
SAO PAULO, March 31 (Reuters) - Brazil's central bank on Wednesday raised its outlook for 2010 inflation, underscoring mounting inflation pressures as a recovery in Latin America's largest economy picks up pace.
The bank raised its inflation outlook for the year to 5.2 percent in its quarterly inflation report, from a previously forecast 4.6 percent.
Inflation sped up in January and February, something that will put pressure on wholesale prices in coming months, the bank said in the report.
The bank maintained its forecast for 2010 economic growth at 5.8 percent.
"The central bank is doing what's necessary to keep inflation within the target and will do, in the future, what's needed to keep it within the target," said Carlos Hamilton Vasconcelos Araujo, the bank's new director of economic policy.
Araujo replaced Mario Mesquita, one of the strongest advocates of the central bank's inflation-targeting regime, who left his post on Wednesday in a long-expected departure.
Inflation early in the year has been affected by seasonal factors, Araujo said.
Policymakers decided not to hike the benchmark interest rate, the Selic, at their March meeting in part because they wanted to maintain the credibility of their communications strategy, he added. He did not give further details.
The bank maintained the Selic at its record-low 8.75 percent on March 17, despite expectations that it would raise borrowing costs to combat rising inflation pressure. It is widely expected to increase the rate at its April meeting.
Brazil returned to growth last year well ahead of more developed economies, and the brisk rebound since then has stoked fears of rising prices.
Local economists have raised their outlook for 2010 inflation for 10 straight weeks in a central bank survey released each Monday.
Price pressures will recede in the first half of 2011, the bank forecast, slowing to 4.9 percent for the year.
Brazil's currency, the real (BRBY), will end the year at 1.83 per dollar, the bank forecast, from a previously-seen 1.75 per dollar.
The real ended Tuesday trading at 1.795.
Wed Mar 31, 2010 2:39pm EDT
SAO PAULO, March 31 (Reuters) - Brazil's central bank on Wednesday raised its outlook for 2010 inflation, underscoring mounting inflation pressures as a recovery in Latin America's largest economy picks up pace.
The bank raised its inflation outlook for the year to 5.2 percent in its quarterly inflation report, from a previously forecast 4.6 percent.
Inflation sped up in January and February, something that will put pressure on wholesale prices in coming months, the bank said in the report.
The bank maintained its forecast for 2010 economic growth at 5.8 percent.
"The central bank is doing what's necessary to keep inflation within the target and will do, in the future, what's needed to keep it within the target," said Carlos Hamilton Vasconcelos Araujo, the bank's new director of economic policy.
Araujo replaced Mario Mesquita, one of the strongest advocates of the central bank's inflation-targeting regime, who left his post on Wednesday in a long-expected departure.
Inflation early in the year has been affected by seasonal factors, Araujo said.
Policymakers decided not to hike the benchmark interest rate, the Selic, at their March meeting in part because they wanted to maintain the credibility of their communications strategy, he added. He did not give further details.
The bank maintained the Selic at its record-low 8.75 percent on March 17, despite expectations that it would raise borrowing costs to combat rising inflation pressure. It is widely expected to increase the rate at its April meeting.
Brazil returned to growth last year well ahead of more developed economies, and the brisk rebound since then has stoked fears of rising prices.
Local economists have raised their outlook for 2010 inflation for 10 straight weeks in a central bank survey released each Monday.
Price pressures will recede in the first half of 2011, the bank forecast, slowing to 4.9 percent for the year.
Brazil's currency, the real (BRBY), will end the year at 1.83 per dollar, the bank forecast, from a previously-seen 1.75 per dollar.
The real ended Tuesday trading at 1.795.