By Marcela Ayres

BRASILIA (Reuters), Roberto Campos Neto, chief of the Brazilian central bank said Wednesday that he was stunned by price pressures in Brazil which have led to worse than expected inflation. However, he reiterated his bank’s determination to reduce inflation to within its target range.

The market is growing concerned that inflation could surpass the target of 3.5% next year. There’s a tolerance of 1.5 percentage points each side.

Campos Neto stated, “We were surprised at how consistent some (price shocks) have been,” during a Bank of America conference (NYSE:).

We have stressed that we want to achieve the target of bringing inflation down to zero. He also said that inflation’s qualitative aspects have deteriorated more than expected.

In October the central bank raised interest rates by 150 basis points to 7.75% and signaled another such hike this year, stepping up the world’s most aggressive tightening cycle as inflation moves into double figures.

However, some market experts believe that an even larger rate hike may be required due to stubborn inflation or uncertainty about fiscal discipline.

Campos Neto indicated that the central banks would not stop raising the interest rates at the appropriate pace, and will avoid the common mistakes of going too fast or too slow.