In the month to mid-April, IBGE said, Brazil's consumer
prices rose 0.57% after a 0.69% rise in the previous month. The
index had been expected to rise 0.61%, according to the median
forecast in a Reuters poll.
The monthly increase was driven by higher transportation
costs after a rise in gasoline and ethanol prices, the agency
said, although partially offset by slowing costs in the key food
and beverage group.
"All told, the inflation picture continues to improve in
Brazil," Pantheon Macroeconomics' chief Latin America economist
Andres Abadia said. That supports a view that "interest rates
cuts are around the corner," he added.
(Reporting by Gabriel Araujo;
Editing by Tomasz Janowski and Andrea Ricci)
(Adds economists' comments, details)
By Gabriel Araujo
SAO PAULO, April 26 (Reuters) - Brazil's inflation
slowed more than expected and reached its lowest since late 2020
in the year to mid-April, a reading the government is likely to
see as backing its calls for an interest rate cut even as the
central bank maintains a hawkish tone.
The country's IPCA-15 inflation index eased to a 30-month
low of 4.16% from 5.36% in the previous month, government
statistics agency IBGE said on Wednesday, coming in below market
consensus of 4.20% in a Reuters poll of economists.
The latest data comes a day after central bank Governor
Roberto Campos Neto ruled out an imminent interest rate cut,
saying in a Senate hearing that the current rate was appropriate
to address inflation concerns.
President Luiz Inacio Lula da Silva has been calling for
lending costs to be lowered from their current six-year high of
13.75%, but Campos Neto rebuffed his criticism by saying
policymakers needed to ensure inflation expectations were within
the official targets.
"Will RCN and his team wait for current inflation to reach
3% before starting to cut interest rates?" Luiz Alves, a fund
manager at Versa, questioned in a Twitter post.
Brazil has an inflation target of 3.25% for this year, but a
central bank survey showed that private economists expect the
official index to reach 6.04% by the end of the year.
William Jackson, Capital Economics' chief emerging markets
economist, said he doubts policymakers will pivot to interest
rate cuts imminently, considering that core inflation remains
strong and the central bank has been striking a hawkish tone.
"That said, the odds are shifting slightly towards an
earlier start to the easing cycle than our current forecast (for
Q4)," he added in a note to clients.
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