Brazil central bank says Finance Ministry efforts have reduced upside risk on inflation

BRASILIA, March 28 (Reuters) - Brazil's central bank said that the Finance Ministry's commitment to implementing fiscal measures and the reinstatement of fuel taxes smooths the fiscal stimuli on demand, reducing the upside risk on inflation in the short-term, according to minutes from its last policy meeting on Tuesday.

In the minutes of the meeting held between March. 21-22, when the rate-setting committee known as Copom kept the benchmark rate at 13.75%, policymakers said that there is no mechanical relationship between the convergence of inflation and the presentation of an awaited fiscal framework. Still, they stressed that a credible new rule "might result in a more benign disinflationary process through its effect on the expectations channel." (Reporting by Marcela Ayres; Editing by Steven Grattan)