Brazil Says Too Costly to Bring Inflation to Target in 2012


Matthew Malinowski and Raymond Colitt
Bloomberg News
September 27, 2012

Brazil’s central bank said that it’ll miss its inflation target for a second straight year as policy makers focus on spurring a recovery in the world’s second-biggest emerging market.

The bank’s economic policy director, Carlos Hamilton, said today that a spike in commodity prices means that inflation is unlikely to converge to the 4.5 percent target until the third quarter of 2013. As recently as July, bank President Alexandre Tombini said inflation would slow to the midpoint of the 2.5 percent to 6.5 percent range by year-end despite a jump in food prices.

“If you fight against a spike in inflation there is a cost in terms of activity,” Hamilton told reporters in Brasilia. “We would have three months to turn it around. Theoretically, this would imply a cost that is too high.”

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