Brazil’s government set its inflation target for 2014 at its current level as consumer prices continue to show resilience even as the economy is slowing for the second straight year.
Brazil currently targets inflation of 4.5 percent plus or minus two percentage points. The National Monetary Council, or CMN, in June 2003 cut the 2005 target to 4.5 percent from 5.5 percent, plus or minus 2.5 percentage points. A year later it narrowed the margin to 2 percentage points for 2006.
President Dilma Rousseff said during her election campaign in 2010 that the country could gradually reduce its inflation target. While annual inflation has slowed to 4.99 percent in May it has remained above the center of the target range for 21 months and is expected to accelerate to 5.5 percent in 2013, according to the latest central bank survey.
Marcio Holland, secretary for political economy at the Finance Ministry, told reporters today that Brazil’s inflation targets must be “compatible with reality.”
The CMN, which is made up of central bank President Alexandre Tombini as well as Finance Minister Guido Mantega and Planning Minister Miriam Belchior, also kept the 2013 target at 4.5 percent.
Tombini was part of the group of that designed Brazil’s inflation-targeting system, introduced in 1999. Since then inflation has hit or come in below the center of the target in 4 out of 13 years.
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