UPDATE 3-Brazil cenbank raises 2016 inflation view, rate hike possible

miércoles 23 de diciembre de 2015 11:52 GYT

(Adds comment from central bank director 4th and 5th paragraphs)

By Alonso Soto

BRASILIA Dec 23 (Reuters) - Brazil's central bank raised its inflation forecast for next year to near the ceiling of the official target range, signaling it could resume interest rate hikes to tame a surge in price expectations despite a deepening recession.

In its quarterly inflation report released on Wednesday, the bank raised its 2016 inflation forecast to 6.2 percent from 5.3 percent previously. However, the bank sees annual inflation dropping to 4.8 percent in 2017.

The bank aims to keep inflation at 4.5 percent, the center of the official target range of between 2.5 and 6.5 percent.

Central bank board member Altamir Lopes vowed to comply with the bank's mission to lower inflation to target.

"The bank has the determination, autonomy and instruments to fulfill its strategy," Lopes told journalists. "Those instruments will be used when necessary."

The reversal of a decline in inflation expectations is adding pressure on the bank to hike its benchmark Selic rate , already one of the world's highest at 14.25 percent, despite the rapid fall of the once-booming economy into its worst recession in 25 years.

The bank's board next meets on Jan. 20 to decide on rates.   Continuación...