May 9, 2016 / 2:24 PM / 2 years ago

UPDATE 1-Brazil central bank sees no room to cut rates -official

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BELEM, Brazil, May 9 (Reuters) - Lingering uncertainty due to an expansionist fiscal policy and high inflation prevent Brazil’s central bank from cutting interest rates despite a crippling recession, bank director Altamir Lopes said on Monday.

Speaking in the northern city of Belem, Lopes, who is director of economic policy, said authorities should “persevere” in their fight against inflation to allow the economy to recover.

Lopes said the worsening recession has reduced inflationary pressures. Even so, inflation expectations remain too high and not in line with the bank’s objective to bring inflation back to the 4.5 percent target in 2017.

“We need to persevere in the fight against inflation,” Lopes said.

The central bank’s eight-member board, know as Copom, kept its benchmark Selic rate unchanged at 14.25 percent for the sixth straight time on April 27 despite calls from politicians and business leaders for lower borrowing costs.

The central bank board, led by Alexandre Tombini, is expected to be replaced gradually in a possible government of Vice President Michel Temer. The Senate is expected this week to suspend President Dilma Rousseff for allegedly breaking budgetary laws. (Reporting by Alonso Soto; Editing by Bernadette Baum and Dan Grebler)

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