Brazil’s Inflation to Remain at ‘New Level’ of 5.5%, Itau Says

Brazil’s inflation rate will remain around 5.5 percent, above the central bank’s target, Itau Unibanco Holding SA (ITUB)’s chief economist told reporters in London.

The 5.5 percent rate is the IPCA price index’s “new level” and will not converge to target, Ilan Goldfajn said. The central bank targets inflation of 4.5 percent plus or minus two percentage points.

The IPCA index rose 5.28 percent in September from the previous year. The rate has quickened every month since June, and was the fastest since February. The national statistics agency on Oct. 19 will publish the mid-month inflation index.

Carlos Hamilton, the central bank’s economic policy director, said last month that a spike in commodity prices means inflation is unlikely to converge to target until the third quarter of 2013.

President Dilma Rousseff’s administration has adopted measures in recent months to spur the economy, including lowering taxes on company payrolls and consumer goods, reducing bank reserve requirements, and pressuring banks to lower loan spreads. The central bank, meanwhile, has cut the benchmark interest rate by 525 basis points since August 2011, to a record low 7.25 percent.

To contact the reporter on this story: David Biller in Boston at dbiller1@bloomberg.net

To contact the editor responsible for this story: Joshua Goodman at jgoodman19@bloomberg.net

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