BRASILIA, June 24 (Reuters) - Brazil’s central bank barely cut its inflation forecast for next year despite signs of a prolonged economic slump, signaling it could continue to raise interest rates to anchor high inflation expectations.
In its quarterly report released on Wednesday, the bank lowered its 2016 inflation forecast to 4.8 percent from 4.9 percent previously. It sees annual inflation coverging to the 4.5 percent center of the official target in the second quarter of 2017.
The bank said that although inflation is converging to the target in the mid-to-long term, there remains a “revelant” gap between its inflation forecast for late 2016 and the midpoint of the target. (Reporting by Alonso Soto and Silvio Cascione Editing by W Simon)