Brazil's inflation rate fell in March to return within the Central Bank's target range for the first time since 2021, officials said Tuesday, as President Luiz Inácio Lula da Silva pushes for growth-spurring interest-rate cuts.
The annual inflation rate in Latin America's biggest economy fell nearly a percentage point last month, to 4.65 percent, said the national statistics institute, IBGE.
That was Brazil's lowest annual inflation reading since January 2021 (4.6 percent), which was also the last time the rate fell within the Central Bank's target range – currently 1.75 to 4.75 percent.
However, analysts said the drop was unlikely to sway the Central Bank in its stand-off with Lula, who insists Brazil's key interest rate is too high and is stunting economic growth.
"Core inflation remains high and the headline inflation rate is set to rise again next quarter," said William Jackson, chief emerging markets economist at consulting firm Capital Economics. "As a result, we doubt this reading will prompt [the Central Bank] to shift away from [its] hawkish line," he said in a note.
Lula, who took office in January, has openly criticised Central Bank chief Roberto Campos Neto over the benchmark interest rate.
The key rate currently stands at 13.75 percent, one of the highest in the world.
Fearing a recession after Brazil's sluggish economy contracted 0.2 percent in the fourth quarter – the last under ex-president Jair Bolsonaro – Lula is pushing for an interest-rate cut to help spur growth.
But Central Bank policy makers argue inflation is still not under control.
The drop in the inflation rate, from 5.6 percent in February, was driven by falling food prices.
But that was partially offset by rising gasoline prices, as the Lula administration began winding down Bolsonaro-era tax breaks, IBGE said.