Brazil Central Bank Will Raise Rates This Week, Estado Reports

By Jeb Blount
June 1 (Bloomberg) -- Brazil's Central Bank will raise the country's benchmark target interest rate this week in an effort to limit consumer demand and inflation, the Estado de S. Paulo daily newspaper reported citing an unnamed government official.
Consumption by Brazilian families grew 8.6 percent in the last quarter of 2007 and the bank would like to reduce that growth to about 6 percent, the newspaper said.
The rate of purchases by families is growing faster than the economy, which expanded at 5.4 percent last year, raising the risk that the supply of products will fall short of demand, causing prices to soar, Estado reported.
The rate increase could be as much as 0.75 percentage point to 12.50 percent from 11.75 percent, the newspaper said, citing analysts. The median estimate of 19 economists surveyed by Bloomberg News is for rates to rise June 4 by half a percentage point to 12.25 percent.