UPDATE 2-Brazil's inflation slows more than expected in mid-December

(Adds detail on services prices, comment in paragraphs 6 and 7)
    By Silvio Cascione
    SAO PAULO, Dec 21 (Reuters) - Brazil's annual inflation rate
slowed more than expected in mid-December, approaching the top
end of the government's target and paving the way for more
interest rate cuts.
    Brazil's IPCA-15 consumer price index rose 6.58
percent in the 12 months through mid-December, down from an
increase of 7.64 percent in mid-November and close to the 6.5
percent ceiling of the government's target, statistics agency
IBGE said on Wednesday.
    The index had been expected to rise 6.71 percent, according
to the median forecast of 22 economists in a Reuters poll.
    Consumer prices rose 0.19 percent in the month to
mid-December, the lowest reading for the period since 1998.
Prices had risen 0.26 in mid-November. 
    Yields on interest rate futures fell after the IPCA-15
release as traders added bets on a long cycle of monetary
easing. Economists have expected the central bank to accelerate
rate-cutting at its next meeting in January, which could help
lift the economy out of a deep recession.
    Core services inflation, which the central bank tracks
closely because of its sensitiveness to interest rates, eased to
6.47 percent from 6.87 percent in mid-November, according to
calculations by Alberto Ramos, Goldman Sachs' head of Latin
America research. 
    Economist Alessandra Ribeiro of Tendências Consultoria in
São Paulo said: "This was a favorable result for the central
bank to step up the pace of interest rate cuts to 50 basis
points in January." 
    Below is the result for each price category:    

                             Mid-Dec   mid-Nov
 - Food and beverages        -0.18     -0.06
 - Housing                   -0.28     0.36
 - Household articles        -0.52     0.09
 - Apparel                   0.57      -0.03
 - Transport                 0.79      0.46
 - Health and personal care  0.43      0.68
 - Personal expenses         0.63      0.47
 - Education                 0.07      0.02
 - Communication             0.08      0.16
 - IPCA-15                   0.19      0.26
 (Additional reporting by Camila Moreira; Editing by Lisa Von