Brazil sticks to 5.5 % inflation target

"Our line of action continues to expect and chase after the center" of the target, said Central Bank President Henrique Meirelles.

The bank has an inflation target for 2004 of 5.5 percent as measured by the IPCA consumer price index. It has a margin of error of 2.5 percentage points, meaning inflation could finish up at 8 percent and still technically fall within its target.

The bank has chosen to pursue the center of the target when setting interest rates, and Meirelles said its strategy had not changed even as rising oil prices pressure inflation.

Asked about the impact of rising fuel costs, Meirelles said the minutes of the Monetary Policy Committee, which held interest rates steady last week, would refer to that issue.