Brazil 2011 inflation seen at top of target range

Economists slightly lowered their forecast for Brazil's benchmark IPCA inflation index this year to 6.50 percent from 6.52 percent previously, according to a weekly central bank survey published on Monday. Analysts had forecast the 6.52 percent level since late September.

That would put inflation at year-end in line with the ceiling of the government's target range of of 4.5 percent plus or minus 2 percentage points.

Inflation has not ended the year above the target since 2003, and keeping price increases to within the range would be a victory for Central Bank President Alexandre Tombini.

When the central bank cut its benchmark Selic interest rate to 12 percent from 12.5 percent in August, economists worried that policy-makers were not doing enough to rein in inflation, which has sped above the 6.5 percent ceiling since April.

But a worsening global outlook has prompted some economists now to see Tombini as a potential trend-setter. Last week the central bank cut the Selic further, to 11.5 percent.

Brazil's economy grew 7.5 percent last year, the fastest in 24 years and one of the most robust rates among major economies. But a euro zone debt crisis and fragile US economy, as well as fears of a slowdown in China and high inflation rates at home, have braked growth sharply this year.

The survey's predictions represent the median forecast of analysts polled by the central bank at about 100 financial institutions.

Copyright Reuters, 2011