Nov. 6 (Bloomberg) -- Brazil's central bank said the global credit crisis may help slow demand and inflation, suggesting policy makers will maintain interest rates in the months ahead after halting six months of increases last week.

``The consolidation of more restrictive financial conditions may magnify the effect of monetary policy on demand, and over time, on inflation,'' the bank said, according to the minutes of an Oct. 28-29 meeting released today on its Web site.

The eight-member board led by President Henrique Meirelles cited an environment of heightened uncertainty in their unanimous decision to leave ``for the moment'' the so-called Selic rate unchanged at 13.75 percent.

Policy makers will probably hold rates as they wait to see how much the freeze in credit markets will crimp lending and investment in Latin America's largest economy, slow commodities demand and weaken the local currency, economists said.

``They can't close the door on another interest rate hike, but are signaling that they may pause for several months,'' said Roberto Padovani, chief economist at WestLB do Brasil in Sao Paulo. ``The overall balance of risks remains uncertain.''

`More Uncertain'

Inflation, which the bank describes as ``relatively widespread,'' accelerated last month to 6.4 percent from 6.25 percent in September, according to the median estimate in a Bloomberg survey of 19 economists.

The statistics agency will release October inflation data tomorrow. The annual rate has been above the central bank's 4.5 percent target since January.

The worsening global economic outlook since the bank's last meeting may help contain inflation.

The central bank said the outlook for demand and investment was becoming ``more uncertain'' and that they may ``adjust interest rates, although not necessarily in a continuous manner'' in response to the shifting inflationary risks.

Brazil's economy will grow 3 percent next year, compared with an estimated 5.23 percent expansion this year, according to the most recent central bank survey of economists published Nov. 3. The same survey shows inflation ending the year at 6.31 percent, up from 6.14 percent a month earlier.

The real strengthened 0.4 percent to 2.1220 per dollar at 7:37 a.m. New York time from 2.1295 late yesterday.

To contact the reporter on this story: Joshua Goodman in Rio de Janeiro at jgoodman19@bloomberg.netKatia Cortes in Brasilia at at kcortes@bloomberg.net

Last Updated: November 6, 2008 07:42 EST