BRASILIA, Sept 24 (Reuters) - Brazil's central bank raised its inflation forecast for next year well above the center of the official target range despite a deepening economic recession, signaling it could resume interest rate hikes.
In its quarterly report released on Thursday, the bank raised its 2016 inflation forecast to 5.3 percent from 4.8 percent previously. It sees annual inflation dropping to 4.0 percent in the third quarter of 2017.
The central bank aims to keep inflation at the 4.5 percent, center of the official target range,
The central bank halted its aggressive rate-hiking cycle on Sept. 2 to avoid doing more harm to an economy struggling with its worst recession in 25 years. (Reporting by Alonso Soto Editing by W Simon)