Brazil's industrial output resumes growth, but falls short of expectations in June

SAO PAULO, Aug 1 (Reuters) - Brazil's industrial production rose by less than expected in June, according to statistics agency IBGE on Friday, as tight monetary policy shows signs of cooling the sector while tariffs announced by U.S. President Donald Trump start to squeeze global demand. After two months of slowdown, output in Latin America's largest economy grew 0.1% in June from May, IBGE said, below the 0.4% expected by economists polled by Reuters. According to IBGE, 17 of the 25 activities surveyed registered an increase in production, led by the automobile industry. However, that was largely offset by a fall in production for eight activities, among them food products, extractive industries, petroleum products and biofuels. Compared to a year earlier, production in June fell 1.3%, more than the 0.6% drop expected in the poll. Brazil's monetary authority kept interest rates unchanged at 15% earlier this week, the highest level since July 2006, while inflation of 5.30% remained above the central bank's target of 3%, plus or minus 1.5 percentage points. With high interest rates, further falls in industrial output in the coming months are not ruled out, Banco Inter's Chief Economist Rafaela Vitoria said in a statement. Referring to the global outlook, Vitoria said the impact of U.S. tariffs starting in August should continue to weaken industry worldwide.

(Reporting by Isabel Teles; Editing by Kirsten Donovan)