Reuters: US Dollar Report: UPDATE 1-Brazil cbank cuts 2012 GDP view but ups inflation

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UPDATE 1-Brazil cbank cuts 2012 GDP view but ups inflation Jun 28th 2012, 12:07 Thu Jun 28, 2012 8:07am EDT * Central bank cuts 2012 GDP view to 2.5 pct from 3.5 pct * Inflation forecast up to 4.7 pct from 4.4 pct in 2012 * Central bank says pace of recovery very gradual BRASILIA, June 28 (Reuters) - The Brazilian central bank slashed its forecast for economic growth this year to 2.5 percent from 3.5 percent, signaling it may keep pushing the limits on interest rates to pull the economy out of its lull. In its quarterly inflation report, the bank also raised its forecast for 2012 inflation to 4.7 percent from 4.4 percent, but lowered its estimate for next year to 5 percent from 5.2 percent previously. The sharp downward GDP revision means Brazil could expand less this year than it did in 2011, when growth slowed to 2.7 percent from a 7.5 percent expansion in 2010. Most independent economists expect growth of closer to 2 percent this year. "The change in the growth projection reflects in part the fact that the recovery is materializing very gradually," the bank said in the report, adding that activity should accelerate in coming quarters. The slow pace of recovery in Brazil is putting added pressure on policymakers to take more steps to spur the economy. The central bank has already slashed interest rates to record lows, and the government has cut taxes on dozens of consumer products. That flurry of monetary and fiscal stimulus is again stoking price fears for the coming months even as inflation currently moves toward the center of the official target range of 4.5 percent -- plus or minus two percentage points. Link this Share this Digg this Email Reprints

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