Brazil Expecting 5% Inflation for 2005

    The director of economic policy in the Brazilian Central Bank (BC), Afonso Bevilacqua, reaffirmed today that inflation shows "unmistakable signs" of declining.

    Consequently, the bank’s forecast for the Broad Consumer Price Index (IPCA) was lowered to 5%, below this year’s official inflation target of 5.1%.

    Bevilacqua pointed out, however, that this projection depends upon the annualized benchmark interest rate’s being maintained at its current level of 19.50%.

    This perspective is not shared by the financial market, which operates under the assumption that the rate will fall to 18% by the end of the year. In the bank’s view, this increases the inflation rate by 0.2 percentage points to 5.2%.

    The director of the BC presented this information during an announcement of the quarterly report on inflation, which underscores that the cumulative IPCA between January and August was 3.59%, the lowest figure registered for the period since 1998. The tendency, he said, is for inflation to remain low in consequence of reduced uncertainties in the macroeconomic market.



    • Show Comments (2)

    • Guest

      And 19.50 % or 18.00 will not change something. Banks will justify higher spreads anyway…still keeping their indecent lending rates !!!!!

    • Guest

      …you found the best worst. reason not to lower rates…finally !!!!!!

      So the elite, those who have a lot of cash, will continue to have tremendous after inflation returns, without any risk taking.

      But this justify also why the regular citizens or the poors who have to borrow will continue to pay anything from 60 to 150 % borrowing rates…PER YEAR !!!!!!

      Paying such rates will not help them to have a better life…but just the opposite ! Every one knows…this is exactly what you want !!!!

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