Weekly Report - 11 April 2013 (WR-13-14)

The release of fairly grim inflation figures prompted a crisis meeting at the Planalto presidential palace this week. The consensus among private economists is that the central bank’s monetary policy committee (Copom) has no choice but to lift the benchmark Selic interest rate from its current historic low of 7.25%, where it has been since October 2012. The concern in government circles is that an interest-rate rise will kill off a very fragile industrial recovery and dampen consumer sentiment ahead of the 2014 elections. It’s a classic policy dilemma for President Dilma Rousseff.