UPDATE 3-Brazil cenbank signals rate hikes pause, timing unknown

jueves 10 de abril de 2014 13:32 GYT

(Adds comments from central bank chief)

By Alonso Soto and Silvio Cascione

BRASILIA, April 10 (Reuters) - Brazil's central bank on Thursday signaled its year-long monetary tightening cycle is coming to an end, but left the door open for one more rate increase to tame a spike in inflation.

In the minutes of its last rate-setting meeting on April 2, the bank said most of the effects of past rate hikes on inflation should be felt in coming months, hinting it may not need to further increase borrowing costs. The central bank then decided to hike rates by 25 basis points to 11 percent.

However, since that meeting new data showing a pick up in inflation has raised pressure on policymakers to make one final increase of 25 basis points in May.

"This reaffirms the view that the bank is getting ready to end the cycle," said Enestor dos Santos, Brazil economist with BBVA in Madrid. "The big question is whether the minutes remain relevant after March's inflation figure. I believe it does."

Prices rose sharply in March, bringing inflation dangerously close to the ceiling of the official target of 6.5 percent. Annual inflation rose to 6.15 percent last month, topping all estimates in a Reuters poll.

Brazilian central bank chief Alexandre Tombini told reporters in Washington later on Thursday that the bank will monitor the behavior of prices and economic conditions to make the "best decisions."

He said that inflation in the service sector has been easing very gradually because of its rapid pace of growth.   Continuación...