NEW YORK Feb 25 Brazil's central bank will step
into markets if necessary to control excessive currency
movements, the bank's chief said on Monday, adding that
policymakers are working to steer inflation expectations back to
the bank's official target despite stubborn price increases.
Brazil's real has appreciated in recent weeks,
sparking speculation that policymakers are willing to let the
currency strengthen to help dampen price increases. The country
had a history of runaway prices in decades past, and voters have
long memories of those years.
"We will react to any disruptions in the foreign exchange
market," bank chief Alexandre Tombini said at a New York event.
"We might step in to shave off excessive volatility in
foreign exchange markets," he cautioned.
The real has gained almost 4 percent against the U.S. dollar
this year, after dropping against the greenback in 2012.
Brazil's central bank targets inflation at 4.5 percent, plus
or minus 2 percentage points.
While 12-month inflation has stayed just below the top of
that range, the bank has struggled to bring the rate closer to
That has stoked expectations the bank could tighten monetary
policy despite a faltering economic recovery.
Economists still expect 2013 inflation to clock in at 5.69
percent, according to the latest central bank survey.
"Now we have to get back to re-anchoring of inflation
expectations," Tombini said.