Brasília - Growth in the Gross Domestic Product (GDP) for the fifth quarter in a row leads market analysts to estimate a 5.1% increase in the generation of wealth this year in Brazil. This factor translates directly in the favorable performance of economic variables directly related to social well-being, such as increases in domestic consumption and the mass of incomes and employment.

This analysis is part of the Quarterly Inflation Report, released today by the Central Bank, which points out that there is a contradiction between the current interest rates remaining at levels that are "incompatible" with the course of medium-term goals. The persistence of inflationary pressures, in wholesale and retail prices, the report says, causes the market to maintain rigid inflationary expectations for next year, with a forecast of 5.7%. Therefore, above the government's offical target of 4.5%, readjusted by the Central Bank to 5.1%.

"The recent behavior of the indicators provides evidence of the growth cycle that we now observe," the document states. This is because, besides the increase in the salary mass and the credit volume, there has been a greater offer of investments in recent months, so as to assure the continuation of growth in 2005.

Translation: David Silberstein