UPDATE 2-Brazil food prices easing, rate hikes to be felt -Tombini

miércoles 16 de abril de 2014 12:39 GYT
 

(Adds comments from central bank director Araujo)

By Alonso Soto and Tiago Pariz

BRASILIA/SAO PAULO, April 16 (Reuters) - Food prices in Brazil have started to ease and should bring inflation down in coming months, central bank chief Alexandre Tombini said on Wednesday, reinforcing views that policymakers are ready to wrap up their year-long campaign of rate hikes.

He reiterated that a significant part of the impact of past rate increases on inflation has yet to be felt.

"We have worked for inflation to once again remain compatible with the inflation target regime this year," Tombini said in a speech to government officials and business leaders at the presidential palace.

A surge in prices last month has raised worries that annual inflation could end the year above the official target ceiling of 6.5 percent.

Central bank director Carlos Hamilton Araujo said later on Wednesday that monetary policy in Brazil works properly and its transmission to prices remains as efficient as in previous cycles.

Araujo, one of the bank's 8-member committee that decides on monetary policy, reiterated at an event in Sao Paulo that prices still have to react to the recent increase in rates.

Under Tombini the central bank has raised its benchmark Selic rate from record lows of 7.25 percent to 11 percent in a year to battle naggingly high inflation.   Continuación...