Meirelles Says Investors Expect Inflation to Slow (Update1)

By John Fraher
June 25 (Bloomberg) -- Brazilian central bank President Henrique Meirelles said investors expect inflation to slow in coming years as the bank stays committed to keeping consumer prices under control.
``Inflation expectations are coming back to the target,'' Meirelles said in a speech at the Euromoney Global Borrowers and Investors Forum in London today. ``It's very important that inflation is kept on target. The bank is committed to its inflation path.''
The bank's quarterly inflation report, scheduled for release today, may shed light on the central bank's intentions. A June 11 report showed that consumer prices climbed 5.58 percent in the 12 months to May, the fastest pace since January 2006 and more than the 4.5 percent goal for the fifth straight month.
Meirelles said investors expect inflation to slow to the central bank's target in 2010 and to 4.3 percent in 2011. Traders project consumer prices to climb 6.1 percent this year and 4.8 percent in 2009, he said.
Meirelles also said he's confident that ``the markets will adjust the foreign exchange rate if there is any need for that,'' when asked about Brazil's current account.
Brazil's real yesterday rose 0.5 percent to 1.6046 per dollar on speculation the central bank will increase interest rates next month. It has gained 10 percent this year.