Brazilian President Dilma Rousseff pledged to keep up the fight against inflation that has remained above target throughout her term.
“The government is alert and steadfast in its commitment to fight inflation and maintain the balance of public accounts,” Rousseff, 66, said last night in a televised address to the nation.
Rousseff has been struggling to revive the economy as climbing prices and a widening budget deficit erode investor and consumer confidence. She will end her first term in 2014 with the slowest four-year expansion of gross domestic product in more than two decades, according to economists polled by the central bank. Standard & Poor’s in June placed Brazil’s rating on negative outlook, citing weak growth and expansive fiscal policy.
Inflation this year and next will be more than one percentage point above the 4.5 percent mid-point of the target range, according the latest central bank survey of about 100 analysts. Annual inflation unexpectedly accelerated to 5.85 percent in mid-December, above analysts’ 5.74 percent estimate and up from 5.78 percent the prior month.
Policy makers have responded by raising the benchmark interest rate faster than any major world economy tracked by Bloomberg from a record-low 7.25 percent this year to 10 percent. Swap rates on contracts expiring in January 2015 declined 4 basis points, or 0.04 percentage point, on Dec. 27 to 10.59 percent.
“We continue our constant fight against high prices,” Rousseff said, according to the transcript of her speech. “We have had some isolated problems, but we have arrived at a point of equilibrium that allows families and businesses to plan.”
The economy will grow 2.3 percent in 2013 before slowing to 2 percent in 2014, according to the latest central bank survey of economists. Analysts polled by Bloomberg forecast Latin America will expand 2.88 percent in 2014.
“If we imagine a fair and great country and fight for it, we will have it,” Rousseff said. “If we plunge into pessimism and get trapped in disputes and petty interests, we will have a smaller country.”
Trained as an economist, Rousseff is up for re-election in October and must get more than half of the votes to win in the first round. She would win the first round with 47 percent of ballots with Senator Aecio Neves securing 19 percent in one potential election scenario, a Datafolha poll published in Folha de S.Paulo newspaper Dec. 1.
The Nov. 28-29 survey of 4,557 people has a margin of error of two percentage points.
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