Inflation in Brazil is expected to heat up to 6.53% this year, a central bank survey of economists showed on July 21, a figure uncomfortably above the government's target of 4.5%. The projection was also notable because it was higher than the ceiling set by the central bank of 6.5%.
A month ago, the survey of around 100 economic analysts and market traders had given a consensus 2008 inflation projection of 6.08%. The figure was revised upwards this month largely because of price pressure from more expensive food items. The group forecast that inflation would drop back in 2009 to 5%. It also predicted that gross domestic product would grow 4.8% this year and 4% next year.
Central bank chief Henrique Meirelles last week told congress the institution will "respond vigorously to inflation changes."
In June, the bank raised the reference interest rate a half a percentage point to 12.25%. Its monetary policy committee said that posture "will continue as long as necessary," suggesting more hikes until inflation was tamed.
Copyright Agence France-Presse, 2008