Brazil's inflation rate to drop sharply in next months: Central Bank

Brazil's Central Bank said Monday the country's inflation rate will fall sharply in the next few months.

"We will have (month-over-month inflation) rates nearly close to zero in the next two or three months," the bank's Monetary Policy Director Aldo Mendes said.

The decline in the inflation rate can be attributed to such factors as the decrease in food prices, Mendes said. He observed that the projection for the 2011 inflation rate has fallen in the past weeks and now stands at 6.23 percent.

The projection reached 6.51 percent earlier in May, which surpassed the inflation target limit. For 2011, the government set an inflation target of 4.5 percent with two percentage points fluctuation.

Mendes also said recent measures like increasing the Selic rate, the annual benchmark interest rate of Brazil, to halt the rise of the inflation rate have been taking effect. The Selic rate is now at 12 percent, having been raised three times this year.

"We also have the so-called macroprudential measures, such as adjusting the credit levels, banks' reserve requirements, and families' indebtedness levels," he said.

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