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Posted on April 25, 2011
Brazil President Dilma Rousseff said she’s “immensely worried” about accelerating prices as economists covering Latin America’s largest economy boosted their inflation forecast for the seventh straight week. Yields on interest-rate futures jumped.
Consumer prices will rise 6.34 percent in 2011, up from a week-earlier forecast of 6.29 percent, according to an April 20 survey of about 100 economists published today. Economists left unchanged their forecast for inflation next year at 5 percent, the survey showed.
Rousseff, speaking to reporters in Brasilia before meeting with Finance Minister Guido Mantega, said that “under no hypothesis” will the government scale back its fight against inflation.
The central bank slowed the pace of rate increases last week, raising the benchmark interest rate by a quarter-point on April 20 to 12 percent. Policy makers raised the Selic by a half-point at their January and March meetings.
“There’s nothing to trigger a retreat in inflation,” said Jankiel Santos, chief economist at Espirito Santo Investment Bank in Sao Paulo. “With last week’s rate decision, this makes that case even stronger.”
Traders in the interest rate futures market pushed yields for contracts due July 2013 up 10 basis points, or 0.1 percentage point, to 12.78 percent, at 8:45 a.m. New York time. Yields on contracts due July 2011 slipped six basis points, or 0.06 percentage point, to 11.973 percent.
Back to Target
Policy makers aim to bring inflation back to target in 2012 as the cost of meeting the goal this year would be excessive in terms of lost output, the central bank said in its quarterly inflation report published in March.
The real was largely unchanged at 1.5659 per dollar at 8:30 a.m. New York time from 1.5663 on April 20.
Consumer inflation accelerated to 6.44 percent in the year through mid-April, its fastest pace since November 2008. Brazil targets inflation of 4.5 percent plus or minus two percentage points.
Inflation may exceed the 6.5 percent upper limit of the target between July and August, the central bank’s economic policy director Carlos Hamilton said March 30.
The survey also showed economists expect gross domestic product to expand 4 percent this year and 4.21 percent in 2012, compared with the previous week’s forecasts of 4 percent and 4.25 percent respectively.
To contact the reporters on this story: Alexander Ragir in Rio De Janeiro at email@example.com; Andre Soliani in Brasilia at firstname.lastname@example.org
To contact the editor responsible for this story: Joshua Goodman at email@example.com