Brazil’s swap rates fell to a four-week low as policy makers dashed speculation they would step up the pace of interest-rate increases after raising the benchmark rate by 50 basis points for a second straight meeting.
Swap rates due in January declined four basis points, or 0.04 percentage point, to 8.76 percent at 9:32 a.m. in Sao Paulo, the lowest level on a closing basis since June 14.
The real gained 0.2 percent to 2.2600 per dollar. The central bank’s board, led by President Alexandre Tombini, yesterday raised the target rate to 8.50 percent, as forecast by all 51 analysts surveyed by Bloomberg.
The move to continue with a 50 basis point increase “will contribute to put inflation on a decline and assure that this trend will persist next year,” policy makers said in a statement after the decision.
The central bank used the same language in its statement that it did previously, a sign that it will not quicken the pace of rate increases after inflation exceeded the ceiling of policy makers’ target range, said David Beker, Brazil economist at Banco Merrill Lynch SA.
“There were some marginal expectations of an acceleration in the pace of increases and the fact they didn’t change their statement was read by markets as the central bank is comfortable with this strategy,” he said in a phone interview from Sao Paulo.
Inflation in Brazil quickened to a 20-month high of 6.70 percent in June, exceeding the 6.50 percent upper level of central bank’s target range.
bloomberg.com
Swap rates due in January declined four basis points, or 0.04 percentage point, to 8.76 percent at 9:32 a.m. in Sao Paulo, the lowest level on a closing basis since June 14.
The real gained 0.2 percent to 2.2600 per dollar. The central bank’s board, led by President Alexandre Tombini, yesterday raised the target rate to 8.50 percent, as forecast by all 51 analysts surveyed by Bloomberg.
The move to continue with a 50 basis point increase “will contribute to put inflation on a decline and assure that this trend will persist next year,” policy makers said in a statement after the decision.
The central bank used the same language in its statement that it did previously, a sign that it will not quicken the pace of rate increases after inflation exceeded the ceiling of policy makers’ target range, said David Beker, Brazil economist at Banco Merrill Lynch SA.
“There were some marginal expectations of an acceleration in the pace of increases and the fact they didn’t change their statement was read by markets as the central bank is comfortable with this strategy,” he said in a phone interview from Sao Paulo.
Inflation in Brazil quickened to a 20-month high of 6.70 percent in June, exceeding the 6.50 percent upper level of central bank’s target range.
bloomberg.com
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