UPDATE 2-Brazil cenbank sees inflation easing in 2nd half -source

Thu Feb 7, 2013 1:52pm EST

* Central bank sees stable FX rate helping curb inflation

* Consumer inflation to remain slightly above 6 percent in 1st half

* Central bank sees more moderate credit expansion this year

By Patrícia Duarte

SAO PAULO, Feb 7 (Reuters) - Brazil's central bank estimates that a more stable exchange rate and a moderate pace of loan growth will help inflation ease "a lot" in the second half of the year, a source on the bank's monetary policy board said on Thursday.

Twelve-month inflation will remain slightly above 6 percent through the first half of 2013, dangerously near the 6.5 percent ceiling of a government target, but should slow down after that, said the source on condition of anonymity.

The source's comments came after central bank president Alexandre Tombini told the O Globo newspaper that he is worried about inflation in the short term. Earlier in the day, government data showed January consumer prices rose at their fastest monthly pace in nearly eight years.

Tombini's comments sent Brazil's interest rate futures soaring and caused the real to jump more than 1 percent to its strongest level in nearly nine months. Investors fear the central bank may be forced to raise interest rates or strengthen the currency to keep inflation at bay.

The source said, however, that the real is likely to be less volatile this year, following a depreciation of about 30 percent versus the U.S. dollar between July and November.

"Another currency depreciation such as we had (in 2012) is not in our scenario," the source said.

A stronger real - which last traded around 1.97 per dollar, with gains of nearly 4 percent year-to-date - could help curb inflation by lowering the prices of imported goods.

Earlier on Thursday, government data showed Brazil's benchmark IPCA consumer price index rose 0.86 percent in January, fueled by more expensive food. In the 12 months through January, inflation rose to 6.15 percent, the highest reading in a year.

Other factors that should ease inflation in the second half of the year, according to the central bank source, are a smaller increase in Brazil's minimum wage compared with last year and a recent fall in real estate prices.

The central bank also expects credit to grow more slowly this year following a 16 percent expansion in 2012, the source said.

The source's forecast contrasts with remarks made two days ago by Finance Minister Guido Mantega, who said Brazilian banks plan to boost credit this year to support the economy.

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