UPDATE 2-Brazil cenbank says to stay vigilant to battle sticky inflation
(Adds comments from the minutes, market reaction, Treasury chief comment)
By Alonso Soto
BRASILIA Oct 29 (Reuters) - Brazil's central bank said on Thursday it will remain vigilant to battle inflation that is under pressure from a widening budget deficit and a sharp fall in the country's currency.
In the minutes of its Oct. 21 policy meeting, the bank said that the "intense" impact of a weakening Brazilian real and uncertainty over fiscal results are complicating efforts to lower near double-digit inflation.
"In that context, the committee believes that monetary policy should remain vigilant regardless of other policies," the bank minutes said.
The bank also acknowledged it was no longer pursuing its self-imposed goal of bringing inflation back to the 4.5 percent center of the official target range in late 2016, aiming instead to lower inflation "in a relevant horizon".
Annual inflation is currently running at 9.77 percent, well above the target range of 2.5 percent and 6.5 percent for this year, even as Brazil's economy is widely forecast to contract by about 3 percent.
After the minutes were released, yields of interest rate futures rose <0#2DIJ:> across the board on Thursday, traders said.
The bank's monetary policy committee, Copom, last week kept its benchmark interest rate unchanged at 14.25 percent and used the term "vigilant," as it did after it previous meeting, to mean it did not rule out another rate hike. Continuación...