Brazil economic activity up; May inflows up

Brazil’s economic activity
picked up in March from February despite government efforts to
cool growth in the face of inflationary pressures.

Inflows to Latin America’s biggest economy also surged in
early May, bringing the sum for the first 13 days of the month
to well over the total for the month of April.

The central bank’s IBC-Br economic activity index
BRIBC=ECI rose 0.51 percent in March from February, the bank
said on Wednesday. The central bank revised the February gain
to 0.36 percent from a previously-reported 0.32 percent.

Inflows this month to May 13 totaled $8.809 billion, well
above the $1.541 billion in April.

The central bank also bought $3.058 billion on the spot
foreign exchange market over the same time in an effort to
contain volatility in the foreign exchange market and build
reserves.

Policymakers in February said they would slash the 2011
budget by about $30 billion as they tried to help slow
inflation, which could in turn lead to lower borrowing costs.

But 12-month benchmark inflation has sped to 6.51 percent
through April, above the central bank’s target range of 4.5
percent plus or minus 2 percentage points.

The central bank has recently signaled that it could keep
interest rates high for a prolonged period to gradually bring
Latin America’s biggest economy to sustainable growth with
inflation near the target center.