MercoPress. South Atlantic News Agency

Brazil central bank moves 4.5% inflation target timeframe to 2017

“The central bank will adopt necessary measures to fulfill our inflation-targeting objectives and bring inflation to the 4.5% target in 2017,” Lopes said

The Brazilian central bank will take the necessary measures to bring inflation back to the 4.5% target in 2017, bank director Altamir Lopes, said on Thursday. It is the first time the bank has given a timeframe for reaching the center of its official target range after it dropped its outlook to meet this goal late 2016 due to a weaker Brazilian currency.

 “The central bank will adopt necessary measures to fulfill our inflation-targeting objectives and bring inflation to the 4.5% target in 2017,” Lopes said in a briefing about regional economic performance.

Lopes, the bank's director of economic policy and a voting board member, said the adjustment of prices, mostly government administered prices, has been slower than the bank expected. Still, the bank expects an intense slowdown of prices next year as service inflation eases.

The official inflation index for October is scheduled to be announced on Friday but forecasts anticipate annual inflation rate probably approached 10%, the highest in 12 years.

Consumer prices were seen rising 9.91% in the 12 months through October, up from 9.49% in September, according to the median of 22 forecasts for the benchmark IPCA index due out on Friday morning.

On a monthly basis, prices probably gained 0.80%, up from an increase of 0.54% in September, according to the median of 23 estimates. A recent increase in fuel prices by the cash-strapped state firm Petrobras is expected to be a major driver for the inflation surge, in an example of how Brazil's budget crisis continues to put pressure on inflation despite a string of central bank interest rate hikes.

The Brazilian central bank has kept interest rates on hold in its last two policy meetings, signaling borrowing costs will remain stable for some time as a deepening recession is expected to drag down prices.