UPDATE 2-Brazil central bank pledges to limit food inflation jump

martes 18 de marzo de 2014 12:26 GYT

By Luciana Otoni

BRASILIA, March 18 (Reuters) - Brazil's central bank should act to limit the effects of a recent increase in food prices, central bank chief Alexandre Tombini said on Tuesday, signaling that policymakers may keep raising interest rates to battle inflation.

In a presentation to a Senate committee, Tombini said the rise in food prices was temporary and should fade over the next few months.

"At first, this seems to be a temporary shock that tends to be reversed over the next few months. Still, monetary policy should act to make sure these shocks are limited to the short term," he said.

A severe drought hitting some of the country's main agriculture regions had started to increase the value of some foods, mostly vegetables.

Tombini repeated that the full impact of previous rate hikes over inflation remained to be seen and that the bank would stay "especially vigilant" to contain price increases.

The central bank was expected to wrap up its aggressive monetary tightening cycle soon, after adding 350 basis points to the benchmark Selic rate since April 2013.

Although inflation remains high, some policymakers fear more interest rate hikes could hamper an economy that had been stuck in a rut since 2011.   Continuación...