Reuters: US Dollar Report: UPDATE 1-Brazil sees limited inflation risks on global woes

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UPDATE 1-Brazil sees limited inflation risks on global woes Jun 8th 2012, 12:01 Fri Jun 8, 2012 8:01am EDT * Global crisis ensuring inflation stays low, minutes say * Bank reiterates more rate cuts should be done "sparingly" * Bank cut rate to record-low 8.5 pct at meeting last week SAO PAULO, June 8 (Reuters) - A global economic downturn is helping bring inflation in Brazil toward the central bank's target, which should allow policymakers to keep cutting rates over the coming months, according to central bank minutes released on Friday. The bank's Monetary Policy Committee said in the minutes of its last policy meeting that it sees decreasing risks stemming from a mismatch in supply and demand growth, as well as a potential gain in prices. Feeble global growth should help keep prices in Latin America's largest economy at bay. The bank's committee, known as the Copom, maintained its guidance that more rate cuts should be conducted "sparingly." Policymakers unanimously cut its benchmark Selic rate for a seventh straight time to a record low 8.50 percent on May 30 as a once-booming economy stalled in the last three quarters. "In sum, the Copom considers that at this time, the risks for the trajectory of inflation remains limited" the minutes said. "The committee notes that, given the fragility of the global economy, the impact of the external sector has been disinflationary." The Copom also noted that the prospects for a recovery in the domestic economy remain for this and the coming quarters. It also said that a reversal in 12-month inflation readings will lead to an ease in expectations of consumer price increases by market participants. Link this Share this Digg this Email Reprints

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