Brazil’s stock market off to great 2012 start

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Brazil’s stock market off to great 2012 start
SAO PAULO, BRAZIL (BDCi) – – On Friday, Brazil’s Ibovespa equity index climbed to 62,312.13, its highest close since early July 2011.
Economists and analysts widely expect the benchmark interest rate to be reduced by a half-percentage point, to 10.5% from 11%. The bank’s statement, expected along with the rate decision late Wednesday, “should be in line with last one, highlighting the possible effects of the global slowdown on domestic activity,” said Bank of America Merrill Lynch to clients Wednesday.
Finance stocks were higher ahead of the rate decision, due Wednesday evening. Banco Bradesco rose 2.1%, real estate developer BR Malls picked up 2.1% and state-run Banco do Brasil /quotes rose 3.5%.
As Brazilian economic activity shows signs of slowing, inflationary pressures remain a key focus for the central bank. The most recent update, released Wednesday, showed consumer prices in the city of Sao Paulo rose an estimated 0.79% in the four weeks to Jan. 15, according to the Fipe research foundation. Consumer prices rose 0.61% in December.
Brazilian inflation finished 2011 at 6.5%, settling at the top limit of the central bank’s inflation target after spending a part of the year above that level. The inflation target is 4.5%, plus or minus two percentage points.
The bank’s statement will also be in focus after the central bank adopted a “more cautious tone” in its last inflation report, the macroeconomic research team at Itaú BBA wrote, adding that it doesn’t rule out a change in tone in the statement to indicate a shorter rate-reduction cycle.

Source: Marketwatch (abridged version)
Photo courtesy of: comoinvestirmeudinheiro
21 January 2012
1:01p.m. P.S.T.

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