UPDATE 1-Brazil economy seen growing faster in 2012-c.bank

* Says monetary policy easing cycle not finished
* Economy to grow more in H2 than in first half
* Growth will be close to 3 pct in 2011

(Updates with quotes, details, background)
By Subhadip Sircar and Suvashree Dey Choudhury
MUMBAI, Feb 2 (Reuters) - The Brazilian economy should
expand faster in 2012 than the previous year, the country's
central bank governor said on Thursday, helped by further cuts
in interest rates.
Alexandre Antonio Tombini, who was speaking to reporters on
the sidelines of a banking conference in Mumbai, said economic
growth would be close 3 percent in 2011.
An overvalued exchange rate, high taxes and other costs have
kept industrial production flat in Brazil for the better part of
two years, despite an economic boom in other areas of the
economy such as consumer spending.
"(The) economy is picking up some speed as we speak and
Brazil (is seen) growing more in 2012 than in 2011 and growing
more in second half of the year than in first half because of
lags involved in monetary policy," Tombini said.
The central bank said last week structural changes to the
Brazilian economy are helping to pave the way for lower interest
rates, a sea change for a country that has long had some of the
highest borrowing costs in the world.
In its minutes released late January, the central bank said
it would keep slashing rates into single digits. The bank cut
its benchmark Seltic rate by a half percentage point to 10.5
percent on Jan. 18. It was the fourth reduction in a row since
August.
Tombini said there is room for further monetary easing
without jeopardising the central bank's inflation target of
around 4.5 percent in 2012.
Private economists predict inflation will likely end the
year around 5.3 percent, down from last year but well above the
center of the official target.
Tombini said the gains in the real, which has risen sharply
in 2012, have been in line with other currencies.
"2012 started on an optimistic note as far as markets are
concerned. So, this is reflected in currencies around the world,
real included."
Tombini said the country's foreign exchange reserves were
modest as compared to the size of the economy and other
countries.

(Writing by Archana Narayanan; Editing by Ranjit Gangadharan)