Brazil’s Central Bank Worried About Higher than Expected Inflation

In the minutes published today of the Central Bank Monetary Policy Committee’s (COPOM) most recent meeting, held on January 17-18, the committee estimates that inflation in January will exceed expectations.

The document underscores, however, that the upward move is the result of "temporary influences," mainly the increase in fuel prices and bus fare hikes in the capital cities of Belo Horizonte (Minas Gerais), Brasí­lia (Federal District), and Fortaleza (Ceará).

"The rise in inflation at the start of 2006, as detected by various indicators, has been occurring with greater intensity than was originally anticipated," the text says.

"To a great extent, the recent hike is due to temporary influences, predominately seasonal in nature, which should have an impact on inflation in the first two months of the year."

The COPOM points out that this effect should decline over time, without posing a long-term inflationary risk.

In the minutes, the committee reaffirms that it will continue acting to ensure that the gains "obtained up to now in the fight against inflation will be permanent."

To accomplish this, it will follow closely "the evolution of inflation and the various measures of its nucleus, promptly adjusting the posture of monetary policy to the circumstances."

At its most recent meeting, the COPOM reduced the annualized benchmark interest rate (Selic) from 18% to 17.25%, without bias, that is, without signaling an adjustment in either direction prior to its next meeting, scheduled for March 7.

Agência Brasil

Tags:

You May Also Like

Brazilian Judge Orders Recall of Playboy at Request of Catholic Priest

Osvaldo Freixinho, a judge from Rio de Janeiro, Brazil, ordered the Brazilian version of ...

Venezuela Starts Receiving Brazil’s Fuel Alcohol. China Is Next.

Brazilian energy giant Petrobras made its first shipment of fuel alcohol this week. The ...

Brazil Has 6 Confirmed and 30 Suspected Cases of Swine Flu

With two more cases of swine flu confirmed this Friday, May 8, Brazil now ...

In Brazil, Bodies Are Personal Billboards

For thousands of Brazilians, driven by advertising and the cultural industry, the meaning of ...

In Brazil Soy Is Still King, But Cotton and Sugarcane Are More Profitable

In 2004 there was too much rain in some regions and drought in others. ...

Brazilian Minister Envisions Doubling Amazon Production Without Deforestation

Brazil’s Minister of Environment, Marina Silva, affirmed Monday, April 17, that it is possible ...

Brazil Selling 200,000 Oil Barrels a Day Overseas

For two years now, Petrobras has been expanding its foreign sales of oil and ...

Democracy in Brazil Is a Horse of a Totally Different Collor

Among the difficulties that American observers are faced with when trying to assess Brazil ...

In São Miguel das Missões, Brazil, the 17th Century Is Alive in the Ruins

It’s a small, silent town. It is called São Miguel das Missões and is ...

Brazil Says Breaking AIDS Drugs Patent Violates No Law

Brazilian lawmakers have approved a project authorizing the government to break patents on certain ...