UPDATE 1-High inflation prevents Brazil rate cuts amid recession -cenbank
(Adds minutes' observations, context)
BRASILIA May 5 (Reuters) - Inflation in Brazil remains too high for the central bank to consider cutting interest rates despite a crippling recession, according to the bank minutes, released on Thursday, of its last rate-setting meeting.
For the first time in recent years, the central bank said that the government's fiscal position had become expansionary, instead of neutral, complicating its efforts to fight inflation that earlier this year surged to a 12-year high.
The bank's 2016 inflation forecast has fallen from its previous estimate as the recession worsens, but remains above the 4.5 percent center of the official target range, according to the minutes.
Last week, the bank's 8-member board, known as Copom, left its benchmark Selic rate unchanged at 14.25 percent for the sixth straight time.
The central bank's board will likely be replaced once Vice President Michel Temer takes the presidency next week if the Senate, as expected, suspends President Dilma Rousseff for allegedly breaking budget laws. The change of the board and its governor, Alexandre Tombini,will be done gradually, according to Temer advisers. (Reporting by Alonso Soto and Silvio Cascione; Editing by Chizu Nomiyama and W Simon)
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