Brazil Central Bank expects 3.1% GDP growth this year

Brazil's Central Bank said Thursday it expected the economy to grow 3.1 percent this year, up from just 0.9 percent in 2012, with inflation of 5.7 percent.

In its quarterly report, the bank said inflation is forecast to be 5.3 percent in 2014 -- above the center of the official target range, which is 4.5 percent, but below the upper limit of 6.5 percent.

In its previous report, the bank forecast consumer prices would rise 4.8 percent this year and 4.9 percent in 2014.

Meanwhile, President Dilma Rousseff sparked controversy Wednesday when she said from South Africa that she did not agree with an inflation-fighting policy that curbs economic growth.

Financial markets interpreted this as a sign of a wavering commitment to controlling inflation. But Rousseff, who was attending a summit of five emerging powers in Durban, insisted this was not the case.

The Central Bank Thursday stressed it was determined to rein in inflation, warning that "high inflation rates reduce the growth potential of the economy and job creation."

It said the pace of economic activity gained momentum in the fourth quarter of 2012 and that consumer demand would remain strong in the coming months in reaction to the government's tax incentives, interest rate cuts and measures to boost consumption and production.