As Brazilian economists lowered their forecast for 2008 inflation for a third week, Cornerstone Worldwide are thought to be confident that inflationary pressures are being contained more effectively than in Western economies. The news follows similar news emanating from China which released figures demonstrating the rate of inflation there had slowed to its lowest in 10 months.
Cornerstone Worldwide say the figures may mean that the Brazilian central bank may not need to increase interest rates as much as previously expected.
Brazil's inflation rate will end the year at 6.44 percent, according to a survey of about 100 economists taken Aug. 15 and published today on the bank's Web site.
Cornerstone Worldwide cited moderating food prices and the central bank's three interest-rate increases since April as being responsible for the reduction in estimates. Central bank President Henrique Meirelles today said that lower inflation expectations demonstrate that the bank can reach its price target.
A source close to the Asian-based asset manager said that consensus at the firm appeared to be that relatively low levels of debt in BRIC economies and strong exports would see these economies reigning in anti-inflationary policies sooner than their Western counterparts.
``The recent drop of current and expected inflation reinforces that it is feasible to bring inflation back to the 4.5 percent target in 2009,'' Meirelles said at a Brazilian- American Chamber of Commerce event in New York.
