Brazil central bank says rate hike could be needed

SAO PAULO, Dec 22 (BestGrowthStock) – Brazil’s central bank raised
its inflation forecast for 2010 and 2011 and suggested interest
rate hikes could be on the way to contain those pressures.

The bank raised its 2010 inflation outlook to 5.9 percent
from a previous 5.0 percent, and its 2011 forecast to 5.0
percent from 4.6 percent.

The bank’s inflation target for this year and next is 4.5
percent plus or minus 2 percentage points.

“It’s important to highlight that, in an inflation-targeting
regime, deviations from the target at the magnitude implicit in
these forecasts suggest the need to implement in the short term
an adjustment in the benchmark interest rate to contain the
imbalance in the pace of expansion between domestic demand and
productive capacity of the economy, as well as to reinforce
inflation expectations.”

(Reporting by Vanessa Stelzer and Luciana Lopez; Editing by
Toby Chopra)

Brazil central bank says rate hike could be needed