Reuters: US Dollar Report: UPDATE 1-Brazil has room to expand consumption-cenbank

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UPDATE 1-Brazil has room to expand consumption-cenbank Jun 19th 2012, 16:30 Tue Jun 19, 2012 12:30pm EDT SAO PAULO, June 19 (Reuters) - Brazil has room to bolster consumption as employment hovers near record highs and inflation continues to fall toward the government's target, central bank chief Alexandre Tombini said on Tuesday, suggesting additional interest rate cuts are possible. Tombini said a worsening global economic slowdown should continue to have a disinflationary effect on Brazil while aggressive fiscal and monetary stimuli boosts activity later this year. "There are important (economic) stimuli whose effects have not yet fully manifested," Tombini said in a speech in Sao Paulo. The U.S.-trained economist said he shares the view of most market analysts who expect the economy to grow at an annual rate of 4 percent in the second half of the year and above 4.5 percent in the first half of 2013. The Brazilian economy has flirted with recession since mid-2011 and now faces the risk of further international market turmoil as Europe struggles to end a 2 1/2-year debt crisis. Tombini has led an aggressive easing cycle that has trimmed 400 basis points off the bank's benchmark Selic rate since August 2011 to a new record low of 8.50 percent.

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