BRASILIA Jan 24 Brazil's central bank said on Thursday that a recent pick-up in inflation was due to expiring tax breaks and seasonal transportation pressures, but again signalled that interest rates will remain on hold for some time.
The central bank held rates steady for the second straight time at 7.25 percent at its last meeting on Jan 16, in a bid to fire up a fragile economic recovery without fueling already high inflation.
In the minutes of that meeting, the bank warned that inflation has worsened in the short-term and that the recovery in domestic activity has been less intense than expected.
The government of President Dilma Rousseff is scrambling to keep a lid on inflation, which rose faster in the month to mid-January than most analysts expected. Trailing 12-month inflation rose to 6.02 percent in mid-January, well above that of regional peers like Mexico and Chile whose economies are growing at a much faster pace.