Alexandre Tombini, the President of the Central Bank of Brazil stated that the policy makers won’t hesitate to take any step for slowing the inflation in this Latin American country. The inflation in Brazil, incidentally, has been over the mid-point of the target range since Tombini took the office. The board of the bank is led by Tombini and on last month, it voted 6-2 for increasing the benchmark Selic rate to 7.50%. The same was held at a record low figure of 7.25% since last October. This increase is the first since July, 2011 and it was done as the annual acceleration surpassed 6.5% upper limit of the target range of the bank in last March.
Dilma Rousseff, the President of Brazil, is currently under pressure to slow down the inflation which is threatening the economic recovery process of Brazil. Higher prices sap the domestic demand, thereby causing harm to the local economy. According to the estimates done by the analysts, the retail sales are expected to contract for the 2nd straight month in this March.
According to Tombini, the Central Bank is continuously acting. It has kept a vigilant eye on the whereabouts and if they feel the need, they will act again. The bank is aiming to consolidate inflation at lower levels in 2013 and the next year as well.
Swap rate contracts to mature in January, 2015 gained 11 basis points and these are currently at 8.35%. Traders increased the bets that the policy makers will be opting to increase the borrowing costs by half a percentage point after it was increased by a quarter point only in April.
Annual inflation of Brazil has continuously stayed above 4.5% mid-point of target range of Central Bank since Tombini took over in January, 2011. Inflation has slowed down to 6.49% in last month. However, the consumer prices have jumped up by 0.55%, which is bigger than the forecasted 0.48%.
On last year, Australia’s economy grew at a rate of 0.9%. Incidentally, Australia is the 2nd biggest emerging economy in the world and its last year growth was less compared to US, Japan or the other major emerging markets, such as India, China, Russia, Mexico and South Africa. As far as the March quarterly inflation report is concerned, Government expects the GDP to expand to 3.1% in 2013.