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Brazil to retain $60bn currency programme
September 24, 2013, 9:23 am

 [Getty Images]

Analysts have also kept their growth forecast for next year at 2.2 per cent [Getty Images]

Brazil has maintained its growth forecast for this year at 2.4 per cent, but downgraded projected inflation to 5.81 per cent, says the Central Bank of Brazil.

According to a survey of the country’s main financial institutions by the central bank, gross domestic product (GDP) growth of Latin America’s largest economy should reach the 2.4 per cent mark this year.

The central bank’s Chief Alexandre Tombini also announced on Monday that Brazil will keep its $60 billion currency intervention programme unchanged despite a recent rally in the real.

“From our perspective the programme is adequate, is working well, so there is no news whatsoever from our side on this issue,” said Tombini.

Analysts also kept their growth forecast for next year at 2.2 per cent, despite reducing the projected inflation forecast for 2014 from 5.82 per cent to 5.81 per cent.

Tombini told lawmakers in a congressional hearing last week that pessimism about the Brazilian economy is not warranted by recent data, which shows local industry gradually recovering.

Tombini also said that the central bank will use all instruments at hand to reduce volatility in the foreign exchange market.

Both growth and inflation forecasts will be included in the government’s target range, since Brazilian officials target an inflation rate of 4.5 per cent for the current year and next year, with a two-point margin.

Analysts expect Brazil’s basic interest rate, currently at nine per cent, to rise to 9.75 per cent by the end of the year and stay at this figure in 2014.

Source: Agencies