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Just what investors need. Another economy and financial market to worry about.

Now it’s Brazil. Although compared to the European debt crisis, this worry should be filed under “fret” rather than “panic.”

Consumer inflation in Brazil jumped at an annual rate of 5.2% in the survey period that ended in mid-November. For the last 12 months the inflation rate is 5.47%. That’s the fastest pace for consumer inflation in 20 months.

The November increase raises the odds that Brazil will miss its inflation target of 4.5% plus or minus two percentage points for 2010. That would be the first miss for Brazil since 2003. And the jump almost assures that the country’s central bank, the Banco Central do Brasil, will resume its policy of interest rate increases in 2011. The bank had cut its benchmark Selic rate to 8.75%, the lowest ever, in early 2010 before beginning a series of interest rate increases that took the rate back up to 10.75.

At the start of those interest rate increases economists had been projecting that the central bank would raise rates to 11% in 2010 before going on hold. The Banco Central never quite reached that level as the euro debt crisis slowed the Brazilian economy enough to damp inflation. Or so the bank believed. Economists are now projecting that the central bank will take interest rates to 12% by the end of 2011.

An interest rate of 12% isn’t a huge issue for Brazil’s economy. The country is used to double-digit interest rates.

But Brazil’s hard won reputation for monetary discipline is on the line. If the central bank doesn’t act aggressively to tame inflation, Brazil can kiss goodbye to improvement in its credit rating. Brazil’s credit rating hit investment grade in 2008 for the first time ever.

This is actually the first major test of President-elect Dilma Rousseff. The bond market is skeptical that Dilma will act to cut Brazil’s bloated government workforce after she takes office on January 1. The bond futures market is currently betting that interest rates will hit 13% by the end of 2011, substantially higher than the consensus of 12% among economists.

Investor expectations are rising for inflation too. The difference in yield between the government’s inflation-linked and fixed-rate notes, rose to 6.78% on November 19.

I think you can look for a rocky few months for Brazil’s stock market as the Dilma administration is asked to prove itself. (And, of course, the euro crisis and uncertainty on China’s inflation and growth policies won’t make the going any easier.)