MercoPress. South Atlantic News Agency

Brazilian economy beasts forecasts: grows at fastest pace in six months in July

President Rousseff, “an effort for growth to reach 4% and a little more”

The Brazilian economy expanded at its fastest pace in six months in July, even as the central bank bets on slower growth to curb the fastest inflation in six years.

Economic activity, a proxy for GDP, rose 0.46% in July from the previous month, according to the central bank’s seasonally adjusted index, after contracting a revised 0.25% in June.

Central bank President Alexandre Tombini cut the benchmark interest rate a half point to 12% on Aug. 31, after raising it at the previous five policy meetings, citing a “substantial deterioration” in the global economy. Traders are betting the central bank will cut the rate to 11% by the end of the year.

Activity was up 1.66% from the same month a year ago, according to the non-seasonally adjusted series.

President Dilma Rousseff said on Wednesday that she hopes Brazil’s economy will grow “a little more” than 4%, more than analysts are forecasting.

“We’re going to make an effort for growth to reach 4% and a little more,” she told reporters in Brasilia. “We’re counting on a rebound in the last quarter.”

Economists lowered the growth forecast in the latest central bank survey. They now expect growth to slow to 3.56% this year, down from a forecast of 4% at the start of June. Last year the economy expanded 7.5%, its fastest pace in more than two decades.

Brazil’s growth rate will lag that of Russia, India and China, the other so-called BRIC countries, between 2011 and 2014, according to forecasts from the IMF.

Consumer prices rose 7.23% in the year through August, exceeding the 6.5% upper limit of the central bank’s target range for a fifth straight month. The bank targets inflation of 4.5%, plus or minus two percentage points.