Reuters: US Dollar Report: UPDATE 1-Brazil economy to speed up in second half 2012 -Tombini

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UPDATE 1-Brazil economy to speed up in second half 2012 -Tombini Jul 23rd 2012, 16:31 Mon Jul 23, 2012 12:31pm EDT * Central bank chief says there are signs economy accelerating * Chances of extreme event lower despite Spain BRASILIA, July 23 (Reuters) - The Brazilian economy is in the process of recovery, with recent interest rate cuts and stimulus measures expected to lead to higher levels of growth in the second half of 2012, central bank president Alexandre Tombini said on Monday. The central bank has hinted its aggressive rate-cutting cycle could be drawing to an end, but is leaving the door open for further cuts if the economy continues to disappoint. "We have some signs that supports this view of stronger growth in the second half starting in the third quarter. We are confident with the view that third quarter growth in annualized terms will be much stronger," Tombini said in a conference call with foreign reporters and analysts. Tombini said he sticks with his view that the probability of an "extreme event" in international markets is lower despite recent events in Spain and Greece. Stocks sank worldwide on Monday on mounting fears that Spain could soon become the fourth euro zone member to request a full bailout. The Brazilian economy has struggled to grow since mid-2011 due to the fallout of the debt crisis in Europe, high production costs and previous government efforts to prevent overheating. The largest Latin American economy will likely have its worst annual performance since 2009, growing by 1.9 percent according to the median of market forecasts. The central bank has cut its benchmark Selic rate in eight straight meetings to a record low of 8 percent since August, and is expected to deliver one more cut next month. Tombini reiterated the bank's commitment to an inflation target of 4.5 percent per year plus or minus two percentage points, though he noted that the process by which inflation converges towards the center of the target is "not linear." Consumer prices rose faster than expected in the month to mid-July as measured by the benchmark index IPCA, and analysts expect inflation to bottom out from its current 5 percent level to 5.5 percent by the end of next year. Link this Share this Digg this Email Reprints

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