Brazil Inflation Seen Rising Slightly

Brazil’s IPCA inflation index is expected to record a 3.2% increase in 2006, rising to 4.1% in 2007 and 4.3% in 2008, according to Henrique Meirelles, governor of Brazil’s Central Bank. This slight growth is much better than in previous years, and Meirelles, speaking at an EMTA panel in New York, boasted many other positive macro factors that are contributing to a better growth outlook. Besides a better legal and institutional framework, Meirelles referred to positive debt dynamics, flexible exchange rate and improvement in the balance of payments that are all contributing to what he terms a “stability dividend”. He added that Central Bank officials were currently defining policy for the next Lula administration and would look to boost foreign investment. “The priorities are fostering investment, public and private. That’s our challenge … and keeping price stability,” said Meirelles.