IMF downplays inflation fears in Brazil

Thu Jul 1, 2004

WASHINGTON, July 1 (Reuters) - The International Monetary Fund on Thursday played down fears of rising inflation in Brazil, saying the overall performance of the economy continued to be strong.
"We view growth becoming firmly entrenched," said IMF spokesman Thomas Dawson at a regular press briefing, noting Brazil's two consecutive quarters of growth near 6 percent, surging exports and a "very strong current account."

"So I would not focus on inflation numbers in particular," he said. "That is something the authorities obviously are looking at, but I think the overall pattern of performance in Brazil continues to be very strong."

Brazil has been struggling to control inflation. Brazil's central bank raised its forecasts inflation in 2004 to 6.4 percent from 5.2 percent because of higher-than-anticipated fuel, food and utility price increases.

Hikes in telephone and electricity costs, as well as increased food costs after bad weather, could boost inflation in the coming months.

Brazil on Wednesday set an inflation target for 2006 of 4.5 percent and kept its similar 2005 goal as an indication it intends to keep a tight rein on rising consumer prices.

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