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BRASILIA, June 22 (Reuters) - The Brazilian government is considering lowering its inflation target for 2017 to demonstrate its commitment to battling high inflation, an official source close to the deliberations told Reuters on Monday.
The official, who declined to be named because the talks are not public, declined to say whether the government planned to reduce the target midpoint from 4.5 percent or to narrow the tolerance range of two percentage points.
Any changes to the goal would be the first since 2004 when the range for 2006 was narrowed to 2 percentage points from 2.5.
The country's national monetary council, the highest economic body made up of the finance and planning ministers and the central bank chief, will meet on Thursday and is expected to decide on the target. The bank has until June 30 to set the 2017 goal, according to Brazilian law.
"It is possible that the 2017 target will be revised," said the official. "The idea in a second term (for President Dilma Rousseff) was to work with lower inflation targets."
The official, who is not from the central bank, did not say how likely reducing the target was.
The finance and planning ministries and the central bank declined to comment.
Persistently high inflation has turned into a major headache for Rousseff who has vowed to do everything possible to bring down prices in her second four-year term that started this year. Annual inflation spiked to 8.80 percent in the month to mid-June.
In one of the world's most aggressive tightening cycles, the Brazilian central bank has raised interest rates by 275 basis points since October despite growing fears higher rates could deepen an expected recession this year.
A lower 2017 target could ease pressure on the bank to keep raising interest rates to meet its promise to lower inflation to 4.5 percent in late 2016, economists say.
"If markets welcome that (lower target), the bank could signal it is fine with having inflation at 5 percent in 2016," said Jose Francisco Goncalves, chief economist with Banco Fator.
Brazil has one of the highest inflation targets among major emerging economies. Latin American peers such as Chile and Mexico have a target range of between 2 and 4 percent. (Reporting by Alonso Soto; Editing by Cynthia Osterman)