UPDATE 1-Brazil inflation should ease in 2H -central bank director

Thu Feb 21, 2013 10:27am EST

* Director Araujo says Brazilian economy to pick up steam

* Government worried about rising inflation in 2013, 2014

By Luciana Otoni

BELO HORIZONTE, Brazil, Feb 21 (Reuters) - A moderation in agricultural commodity price pressures should help ease Brazilian inflation in the second half of the year, central bank director Carlos Hamilton Araujo said on Thursday.

Araujo, one of the eight voting members of the bank's board, said during an event in the southern city of Belo Horizonte that economic activity should pick up and unemployment remain low.

This year inflation has accelerated dangerously close to the ceiling of the official target of 4.5 percent, plus or minus two percentage points.

The government of President Dilma Rousseff has signaled it is more concerned with rising prices this year even as the economy continues to disappoint with a slower-than-expected recovery.

Senior officials told Reuters that higher inflation could be more difficult to battle this year and next as the economy improves after a raft of government stimulus measures. Rousseff also plans to run for re-election next year, and is likely to increase government spending and pressure prices in the runup to the vote.

Central bank chief Alexandre Tombini, on Tuesday, said that authorities will not hesitate to raise rates to keep a lid on inflation.

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