By Gabriel Araujo
SAO PAULO (Reuters) -Brazil's inflation slowed more than expected and reached its lowest since late 2020 in the year to mid-April, a reading the government is likely to see as backing its calls for an interest rate cut even as the central bank maintains a hawkish tone.
The country's IPCA-15 inflation index eased to a 30-month low of 4.16% from 5.36% in the previous month, government statistics agency IBGE said on Wednesday, coming in below market consensus of 4.20% in a Reuters poll of economists.
The latest data comes a day after central bank Governor Roberto Campos Neto ruled out an imminent interest rate cut, saying in a Senate hearing that the current rate was appropriate to address inflation concerns.
President Luiz Inacio Lula da Silva has been calling for lending costs to be lowered from their current six-year high of 13.75%, but Campos Neto rebuffed his criticism by saying policymakers needed to ensure inflation expectations were within the official targets.
"Will RCN and his team wait for current inflation to reach 3% before starting to cut interest rates?" Luiz Alves, a fund manager at Versa, questioned in a Twitter post.
Brazil has an inflation target of 3.25% for this year, but a central bank survey showed that private economists expect the official index to reach 6.04% by the end of the year.
William Jackson, Capital Economics' chief emerging markets economist, said he doubts policymakers will pivot to interest rate cuts imminently, considering that core inflation remains strong and the central bank has been striking a hawkish tone.
"That said, the odds are shifting slightly towards an earlier start to the easing cycle than our current forecast (for Q4)," he added in a note to clients.
In the month to mid-April, IBGE said, Brazil's consumer prices rose 0.57% after a 0.69% rise in the previous month. The index had been expected to rise 0.61%, according to the median forecast in a Reuters poll.
The monthly increase was driven by higher transportation costs after a rise in gasoline and ethanol prices, the agency said, although partially offset by slowing costs in the key food and beverage group.
"All told, the inflation picture continues to improve in Brazil," Pantheon Macroeconomics' chief Latin America economist Andres Abadia said. That supports a view that "interest rates cuts are around the corner," he added.