PREVIEW-Brazil inflation seen easing to 0.7 pct in March

  
 WHAT: Brazil's March IPCA consumer price index
 WHEN: Thursday, April 7, at 9 a.m. (1200 GMT)
 REUTERS FORECAST: Brazil's benchmark IPCA consumer price
index (BRCPI=ECI: Quote, Profile, Research) is expected to increase 0.7 percent in March
after rising 0.8 percent in February, according to the median
view of 17 analysts surveyed by Reuters. Forecasts ranged from
0.54 percent to 0.78 percent.
 FACTORS TO WATCH: The inflation slowdown should come in
part as the seasonal effects of a jump in education costs fade,
analysts said.
 "Inflationary pressures from transportation costs should
also slow down, with seasonal factors receding," said Luciano
Rostagno, chief strategist with CM Capital Markets.
 But food prices probably rose, the result of higher global
commodity prices, analysts said.
 MARKET IMPACT: While month-over-month inflation will likely
slow, 12-month inflation could stay near -- or even further
approach -- a government ceiling.
 The central bank this year is targeting inflation of 4.5
percent, plus or minus 2 percentage points.
 If 12-month inflation picks up, markets will likely
pressure the central bank to raise interest rates again, after
policy-makers added a cumulative 1 percentage point to their
benchmark Selic rate this year.
 But the central bank has signaled its reluctance to hike
the Selic much more beyond its current 11.75 percent, since
that would feed a worrisome currency rally that has dragged on
industry.
 Slower inflation, in contrast, could give policy-makers
some breathing space to use alternative measures to try to rein
in consumer prices, such as cooling credit by raising bank
reserve requirements.
 (Reporting by Vanessa Stelzer; Additional reporting by Ana
Nicolaci da Costa; Writing by Luciana Lopez)



PREVIEW-Brazil inflation seen easing to 0.7 pct in March