BRASILIA Oct 2 Brazil's central bank sees a
window of opportunity to lower inflation until April 2014
because of the high base of comparison from the previous period,
the bank's chief, Alexandre Tombini, was quoted as saying by
Bloomberg on Wednesday.
His comments were interpreted by some in the market as a
hint that the central bank could extend its rate-hiking cycle
longer than previously expected.
Tombini also said he wants to bring inflation down in 2014
as close as possible to the midpoint of the official target of
4.5 percent, plus or minus 2 percentage points, according to the
In its quarterly inflation report released on Monday, the
central bank said inflation was going to remain stubbornly high
until the third quarter of 2015, raising market bets that
borrowing costs could move back to double-digit territory.
Central bank director Carlos Hamilton Araujo added to those
expectations by saying there was still "a lot of work to be done
by monetary policy to battle inflation."
Under Tombini, the bank has steadily raised its benchmark
Selic interest rate this year to 9 percent in a bid to contain a
surge in consumer prices. Most economists expect the bank to end
the tightening cycle later this year when the Selic rate reaches
9.50 or 9.75 percent.
"What we have here is that the window to fight inflation
goes until April 2014, so investors will interpret that the
central bank will raise interest rates until then," said Jankiel
Santos, chief economist at Espirito Santo Investment Bank in Sao
Paulo, referring to the Bloomberg interview with Tombini.
High inflation has been one of the main political
liabilities for President Dilma Rousseff, who is widely expected
to run for re-election next year.