April 20 (Bloomberg) -- Brazil’s mid-month inflation accelerated to a 11-month high in April, reinforcing speculation the central bank next week will raise interest rates for the first time since 2008 to keep prices in check.
Consumer prices as measured by the IPCA-15 index rose 5.22 percent in the 12 months through mid-April, the government’s statistics agency said today in a report posted on its Web site. From the same period a month earlier, the index rose 0.48 percent, in line with the median estimate in a Bloomberg survey of 36 economists. In March, the index rose 0.55 percent.
The yield on the interest rate future contract maturing July 2010, the most traded on Sao Paulo’s BM&F exchange, rose one basis point to 9.43 percent at 8:33 a.m. New York time. The real rose 0.4 percent to 1.7479 per dollar.
Brazil’s central bank will raise the benchmark Selic rate by a half percentage point from a record low 8.75 percent to 9.25 percent in their meeting next week, according to the median forecast of 21 economists in a Bloomberg survey.
Policy makers face the challenge of preventing the economy from “overheating,” as increasing domestic demand fuels expansion of Latin America’s biggest economy, central bank President Henrique Meirelles said in an interview on April 13. The central bank estimates gross domestic product will expand 5.8 percent this year.
Brazil’s central bank targets inflation of 4.5 percent plus or minus two percentage points.
Economists covering Latin America’s biggest economy forecast the central bank will lift the overnight rate to 11.50 percent by year-end, according to the median forecast in a weekly central bank survey of about 100 economists published yesterday. A week earlier, analysts expected the Selic to end 2010 at 11.25 percent.
To contact the reporters on this story: Adriana Brasileiro in Rio de Janeiro at abrasileiro@bloomberg.net Iuri Dantas in Brasilia at idantas@bloomberg.net
To contact the editors responsible for this story: Joshua Goodman at jgoodman19@bloomberg.net
April 20, 2010, 9:37 AM EDT
http://www.businessweek.com/news/2010-04-20/brazil-s-mid-month-inflation-rises-to-11-month-high-update1-.html
