BRASILIA--Brazil's inflation will move in the direction of a 4.5% annual target set by the government, though in a nonlinear manner, central bank economic department director Carlos Hamilton said Thursday.
The director highlighted that despite some momentary deviation from targets over the years since it was introduced in 1999, the country's inflation targeting system has consistently delivered inflation on a trajectory toward official goals.
"The system has been submitted to stress tests and has been approved with honors," he said following the release of the bank's bulletin on regional economic activity.
The statement comes after Brazil's IBGE statistics institute Wednesday reported 12-month IPCA consumer price inflation in October registered an increase to 5.45% from 5.28% in September.
However, Mr. Hamilton reiterated expectations that inflation should converge toward 4.5% by the third quarter of 2013.
The recent surge in inflation, he said, was due in large part to a "supply shock" brought by a drought in the U.S. and subsequent high commodities prices.
He said, meanwhile, that the bank was aiming to increase transparency of its communications to help coordinate expectations regarding inflation and the economy.
The bank director Thursday also attempted to allay concerns over the impact of slow growth on revenues and the government's recent admission that it may not fully meet its 2012 budget surplus target without the use of accounting mechanisms to deduct public sector investments.
Mr. Hamilton said the government in 2013 should fully meet the 3.1% of gross domestic product target without the use of such deductions.
Regarding economic growth, he said activity should gain resilience going forward amid influence from still robust local credit expansion.
Credit, he noted, continued to grow at a rate well above the expansion of GDP and was expected to expand by about 16% this year.
The economic outlook, he said, should also get a boost from recent actions taken by authorities in the U.S. and Europe to reduce the likelihood of any "extreme events" in the global economy.
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The director highlighted that despite some momentary deviation from targets over the years since it was introduced in 1999, the country's inflation targeting system has consistently delivered inflation on a trajectory toward official goals.
"The system has been submitted to stress tests and has been approved with honors," he said following the release of the bank's bulletin on regional economic activity.
The statement comes after Brazil's IBGE statistics institute Wednesday reported 12-month IPCA consumer price inflation in October registered an increase to 5.45% from 5.28% in September.
However, Mr. Hamilton reiterated expectations that inflation should converge toward 4.5% by the third quarter of 2013.
The recent surge in inflation, he said, was due in large part to a "supply shock" brought by a drought in the U.S. and subsequent high commodities prices.
He said, meanwhile, that the bank was aiming to increase transparency of its communications to help coordinate expectations regarding inflation and the economy.
The bank director Thursday also attempted to allay concerns over the impact of slow growth on revenues and the government's recent admission that it may not fully meet its 2012 budget surplus target without the use of accounting mechanisms to deduct public sector investments.
Mr. Hamilton said the government in 2013 should fully meet the 3.1% of gross domestic product target without the use of such deductions.
Regarding economic growth, he said activity should gain resilience going forward amid influence from still robust local credit expansion.
Credit, he noted, continued to grow at a rate well above the expansion of GDP and was expected to expand by about 16% this year.
The economic outlook, he said, should also get a boost from recent actions taken by authorities in the U.S. and Europe to reduce the likelihood of any "extreme events" in the global economy.
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