Brazil's usually conservative monetary policy committee was expected to hold interest rates steady last night as a sharper-than-expected economic slowdown outweighed inflation fears.

Price rises are well above the central bank target of 4.5 per cent and approaching a target range ceiling of 6.5 per cent. In inflationconscious Brazil, which suffered hyperinflation as recently as 1993 and where many contracts are tied to inflation indices, this is cause for alarm.