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Brazil's Central Bank cuts key lending rate to 13 percent as expected

Brazil's Central Bank cuts key lending rate to 13 percent as expected

The Central Bank on Wednesday cut the Brazil's reference lending rate for a 13th consecutive time in 17 months amid stable inflation expectations and signs of a gradual acceleration of the local economy.
The Central Bank's monetary policy committee cut the reference Selic rate to an annual 13 percent from 13.25 percent.
The rate reduction again moves the Selic down to its lowest level since the bank established its Copom monetary policy committee in June 1996.
The latest move was widely expected among market participants, who said that despite a slight acceleration of inflation in December conditions remained favorable for reductions in the rate.
Wednesday's rate move, however, represented a deceleration in the pace of monetary policy easing for the Central Bank, which has cut the rate on an average of more than half a percentage point at its meetings since September 2005.
Observers said the bank opted for a smaller cut after Brazil's IPCA consumer price inflation accelerated beyond expectations to 0.48 percent in December amid pressure from food, fuels and public transportation costs.
The December IPCA rate brought inflation to 3.14 percent in 2006, well under the government's annual inflation target of 4.5 percent. The price acceleration raised concerns, however, that inflation pressure could mount in the year ahead as Brazil's economy gains steam from interest rate cuts made to date.