Brazil Inflation March 2008

Brazil's annual inflation rate, as measured by the government's IPCA index, climbed to 4.73 percent in March, the highest rate in two years and above the central bank's 4.5 percent annual target. Consumer prices rose 0.48 percent in the month, increasing speculation the central bank will raise interest rates next week for the first time in three years.




Yields on Brazil's overnight interest-rate futures contract for January delivery jumped 10 basis points to 12.46 percent. That's more than 1 percentage point above the central bank's benchmark overnight rate of 11.25 percent.

Central bankers considered raising the benchmark rate last month to slow demand and curb inflation, minutes of the march 4-5 meeting showed. Policy makers boosted their 2008 inflation forecast on March 27 to 4.6 percent, above their annual target rate.

Brazil's real strengthened for a seventh day, gaining 0.3 percent to 1.6885 per dollar. It has advanced 19.9 percent in the past 12 months, the third-biggest gain among the 16 most-traded currencies against the dollar.