Reuters: US Dollar Report: UPDATE 1-Brazil central bank raises inflation, lowers GDP forecasts

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UPDATE 1-Brazil central bank raises inflation, lowers GDP forecasts Jun 27th 2013, 12:17 Thu Jun 27, 2013 8:17am EDT * Inflation forecast up to 6 pct in 2013, 5.4 pct in 2014 * Price outlook may prompt bank to speed up rate increases * GDP down to 2.7 pct from previous forecast of 3.1 pct SAO PAULO, June 27 (Reuters) - Brazil's central bank raised its inflation forecasts for 2013 and 2014, signaling policymakers could accelerate the pace of rate increases in coming months to bring down persistently high inflation. In its quarterly inflation report released on Thursday, the bank raised its 2013 inflation forecast to 6.0 percent from 5.7 percent. That is above the bank's own informal goal for the year to bringing inflation below the 5.84 percent posted last year. "These numbers tell you that they should accelerate the pace of rates hikes. But I still have doubts on whether they will actually do it," said Jankiel Santos, chief economist with Espirito Santo Investment Bank in Sao Paulo. "Given the exchange rate we could see even higher inflation ahead." The central bank surprised investors by stepping up the pace of tightening with a 50-basis-points rate increase at its last meeting on May 29. The bank, which decides again on rates on July 10, is expected by many in the market to raise its benchmark Selic rate 75 basis points to 8.75 percent. In the report, the bank also increased its inflation view for 2014 to 5.4 percent from 5.3 percent previously, well above the center of the official target of 4.5 percent - plus or minus two percentage points. The bank revised down its estimate for economic growth to 2.7 percent this year from 3.1 percent previously. Link this Share this Digg this Email Reprints

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