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Brazil gears up to fight inflation
April 13, 2013, 1:05 pm


The inflation was sparked by increasing food prices after poor harvests due to bad weather [AP]

Brazil is ready to take necessary steps, including higher rates, to control inflation, finance minister Guido Mantega said on Friday at an event in Sao Paulo.

“There is no need to slow growth to control price increases”, Mantega added.

The Brazilian real closed slightly stronger BRL1.9667 against the dollar on Friday.

Brazil’s central bank President Alexandre Tombini has also signalled that the benchmark rate will be raised as soon as inflation accelerates above the bank’s target range.

“There is not and there won’t be tolerance of inflation,” Tombini told reporters in Rio de Janeiro.

“We are closely monitoring all indicators and in the future will make decisions on the best course for monetary policy.”

Brazil’s central bank rate policy committee is scheduled to meet Wednesday to decide on whether to raise the country’s base Selic interest rate from its current all-time low of 7.25 per cent.

The inflation was sparked by increasing food prices after poor harvests due to bad weather.

Tomato prices, for example, have jumped 70 per cent this year, and in some states surpassed meat prices, which were usually much higher.

The country is unlikely to deal with the problems with the exchange rate, which also affected the 2012 inflation rate, he said.

The finance minister said the government was prepared to take measures against inflation “even if unpopular, such as adjustments in interest rates,” Estado news agency reported.

Source: Agencies

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