Brazil’s swap rates climbed after the central bank raised borrowing costs by a half-percentage point for a third straight meeting and signaled that it will maintain the pace of increases.
Swap rates on contracts maturing in January 2015 rose 15 basis points, or 0.15 percentage point, to 10.33 percent at 10:27 a.m. in Sao Paulo. The real slid 0.9 percent to 2.3664 per dollar after dropping Aug. 21 to a four-year low of 2.4543.
The central bank voted unanimously yesterday to lift the target lending rate to 9 percent as forecast by traders in the swaps market.
The statement accompanying the decision said the move will help “put inflation on a decline and assure that this trend will persist next year.” The statement was virtually identical to the one on July 10.
“The only thing we can read is that they will maintain the pace of hikes,” Pedro Tuesta, a senior economist at 4cast Ltd. in Washington, said in a telephone interview.
Policy makers have raised their benchmark rate by 1.75 percentage points since April from a record low 7.25 percent, more than any other central bank tracked by Bloomberg.
Annual inflation slowed to 6.15 percent in the month through mid-August after surpassing the 6.5 percent upper limit of the central bank’s target range earlier this year.
Economic Outlook
Analysts following the economy have cut their 2013 and 2014 median growth forecasts by more than a percentage point since January, according to a central bank survey published Aug. 26.
Finance Minister Guido Mantega rolled back 2013 economic growth estimates to about 2.5 percent from a forecast of 3 percent to 4 percent expansion earlier this year.
“The central bank used to have a double mandate: inflation and economic growth,” Luciano Rostagno, the chief strategist at Banco Mizuho do Brasil SA, said by phone from Sao Paulo before yesterday’s meeting. “Now, we are seeing the central bank focus more exclusively on inflation control.”
Brazil’s monetary policy seeks to mitigate inflation risk, central bank President Alexandre Tombini said in a statement on Aug. 19.
Inflation is under control and officials will work to avoid currency pass-through to consumer prices, Mantega said a week later.
bloomberg.com
Swap rates on contracts maturing in January 2015 rose 15 basis points, or 0.15 percentage point, to 10.33 percent at 10:27 a.m. in Sao Paulo. The real slid 0.9 percent to 2.3664 per dollar after dropping Aug. 21 to a four-year low of 2.4543.
The central bank voted unanimously yesterday to lift the target lending rate to 9 percent as forecast by traders in the swaps market.
The statement accompanying the decision said the move will help “put inflation on a decline and assure that this trend will persist next year.” The statement was virtually identical to the one on July 10.
“The only thing we can read is that they will maintain the pace of hikes,” Pedro Tuesta, a senior economist at 4cast Ltd. in Washington, said in a telephone interview.
Policy makers have raised their benchmark rate by 1.75 percentage points since April from a record low 7.25 percent, more than any other central bank tracked by Bloomberg.
Annual inflation slowed to 6.15 percent in the month through mid-August after surpassing the 6.5 percent upper limit of the central bank’s target range earlier this year.
Economic Outlook
Analysts following the economy have cut their 2013 and 2014 median growth forecasts by more than a percentage point since January, according to a central bank survey published Aug. 26.
Finance Minister Guido Mantega rolled back 2013 economic growth estimates to about 2.5 percent from a forecast of 3 percent to 4 percent expansion earlier this year.
“The central bank used to have a double mandate: inflation and economic growth,” Luciano Rostagno, the chief strategist at Banco Mizuho do Brasil SA, said by phone from Sao Paulo before yesterday’s meeting. “Now, we are seeing the central bank focus more exclusively on inflation control.”
Brazil’s monetary policy seeks to mitigate inflation risk, central bank President Alexandre Tombini said in a statement on Aug. 19.
Inflation is under control and officials will work to avoid currency pass-through to consumer prices, Mantega said a week later.
bloomberg.com
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