Brazil’s economy expanded 1.3 percent in the first quarter from the previous three-month period, the national statistics agency said.
Gross domestic product rose 4.2 percent from a year earlier, the national statistics agency said today in Rio de Janeiro. Both figures matched the median forecasts of economists in a Bloomberg survey. Growth in the fourth quarter of 2010 from the previous three months was revised to 0.8 percent from 0.7 percent.
President Dilma Rousseff’s government aims to cool growth and curb inflation in Latin America’s largest economy by increasing borrowing costs, reducing spending and curbing credit expansion. The measures will slow growth to 4 percent this year from 7.5 percent in 2010, the fastest pace in more than two decades, according to a central bank survey of economists published May 30.
The expansion, fueled by increased lending, record low unemployment and higher commodities prices, has already shown signs of slowing. Industrial production slumped 2.1 percent in April from March, the biggest contraction since 2008, and consumer confidence fell in May to its lowest level in more than a year.
Inflation breached the upper-limit of the official target range for the first time since 2005 in April, when prices rose 6.51 percent. The government targets inflation of 4.5 percent, plus or minus two percentage points.
The central bank raised its benchmark interest rate a quarter of a percentage point to 12 percent in April, after half point increases at its previous two meetings this year. In the minutes of their meeting, policy makers said they would keep raising borrowing costs for a “sufficiently long” period to bring inflation back to the mid-point of its target in 2012.
Traders are betting the central bank will raise borrowing costs 0.25 percentage points at its June 7-8 meeting, according to Bloomberg estimates based on interest rate futures.
The real has gained 47 percent against the U.S. dollar since the start of 2009, the second-best performance among 16 major currencies tracked by Bloomberg after the Australian dollar. The currency fell 0.2 percent to 1.5778 per dollar at 8:11 a.m. New York time.
The yield on the interest rate futures contract maturing in in January 2013, rose 1 basis points, or 0.01 percentage point, to 12.50 percent.
Brazil overtook Italy last year to become the world’s seventh-largest economy, according to the International Monetary Fund.
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