By Matthew Cowley Of DOW JONES NEWSWIRES SAO PAULO (Dow Jones)--Brazil's real opened stronger against the dollar on Monday, but lacked momentum to test the BRL1.70 barrier, as the dollar gained against other major currencies ahead of Tuesday's Federal Reserve meeting. The Fed's open market committee isn't expected to unveil any surprises, with interest rates likely to remain low for an "extended period" and the bond-buying program likely to stay in place. In Brazil, economists are still trying to weigh whether or when the central bank will start to raise interest rates. Brazil's general price index, known as the IGP-M, rose 0.83% in the Nov. 21-30 period compared with an increase of 0.79% during the Oct. 21-31 period, the private Getulio Vargas Foundation said Monday. The latest figure was in line with analysts' expectations, and pushed the 12-month figure up to 11.48%. The IGP-M index is used to adjust a number of contracts in Brazil, including rental agreements and utilities rates. Brazilian financial market analysts and economists once again raised their 2010 and 2011 year-end average inflation forecasts, according to the Central Bank of Brazil's market survey published Monday. They see the IPCA consumer price inflation rate at 5.85% by year-end, up from 5.78% a week earlier, and above the central bank's inflation target of 4.5% for the year. In addition, economists increased their average estimate for 2011 inflation to 5.21% from 5.20%. The survey, however, showed that the economists still expect the central bank's key interest rate, the Selic, to end 2011 at 12.25%, suggesting 1.50 percentage points of rate hikes from the current 10.75%. That's the same as last week's survey. Still, there is growing speculation that the central bank may delay those increases until later in the year, and there is also the possibility that it might resort to alternative methods to try to rein in the red-hot economy. Earlier this month, for example, the central bank raised bank reserve requirements in an effort to slow the expansion of credit. At 1211 GMT Monday, the real was trading at BRL1.7036 per dollar, from the Friday's close of BRL1.7195. Investors, meanwhile, are reluctant to test the BRL1.70 barrier unless there's a significant driver, given that there's always the risk that the Brazilian government may step in with new measures to try to arrest the appreciation of the Brazilian currency. Last week, the central bank resorted once again to twice-daily auctions to buy dollars, ostensibly to build foreign exchange reserves, though market watchers also see that as a signal that the bank wants to halt the currency's gains. -By Matthew Cowley, Dow Jones Newswires; +55 11 3544 7082; matthew.cowley@dowjones.com

Source