Brazil’s swap rates climbed for the first time in a week as traders stepped up bets that the central bank will sustain the pace of increases in borrowing costs at a policy meeting today.
Swap rates on contracts maturing in January 2015 increased three basis points, or 0.03 percentage point, to 10.11 percent at 11:22 a.m. in Sao Paulo.
The real appreciated 0.3 percent to 2.2034 per U.S. dollar.While annual inflation slowed for a third consecutive month in September, the rate remains more than 1 percentage point above the country’s 4.5 percent target.
Traders are betting that policy makers will raise the benchmark lending rate, known as the Selic, by a half-percentage point today for a fourth straight meeting.
“There were expectations that inflation would slow to a more comfortable level, and the market had perhaps been a bit overly optimistic,” Joao Ricardo Costa, the chief economist at Pezco Microanalysis in Sao Paulo, said in a telephone interview.
“Our expectation is the central bank will raise the Selic to 10 percent this year.” The annual inflation rate dropped to 5.86 percent in September from 6.09 percent the prior month, the statistics agency reported today. The median forecast of economists surveyed by Bloomberg was 5.85 percent.
The central bank’s target range is 4.5 percent plus or minus 2 percentage points. Since April, the central bank has increased the benchmark lending rate by 1.75 percentage points to 9 percent, the most among 49 major economies tracked by Bloomberg.
‘Bank’s Objective’
“The central bank’s objective will be to anchor longer-term outlooks in Brazil, which is why it will tighten more severely in the short term,” Andre Perfeito, the chief economist at Gradual Investimentos in Sao Paulo, said in a research note to clients.
The government will remain alert to make sure inflation doesn’t “disturb” Brazilian consumers again, Finance Minister Guido Mantega told reporters in Brasilia. Shorter-term swap rates rose yesterday after Petroleo Brasileiro SA’s Chief Executive Officer Maria das Gracas Foster said in Sao Paulo that the state-controlled oil company may raise gasoline prices this year.
Edison Lobao, Brazil’s minister of Mines and Energy, told reporters in Brasilia today that no decision has been made on a possible increase.
The International Monetary Fund said in a report yesterday that inflation persists in Latin America’s largest economy and threatens to damp consumption, making interest-rate increases “appropriate.”
The fund kept its economic growth forecast for Brazil this year at 2.5 percent while reducing its 2014 estimate to 2.5 percent from 3.2 percent.
bloomberg.com
Swap rates on contracts maturing in January 2015 increased three basis points, or 0.03 percentage point, to 10.11 percent at 11:22 a.m. in Sao Paulo.
The real appreciated 0.3 percent to 2.2034 per U.S. dollar.While annual inflation slowed for a third consecutive month in September, the rate remains more than 1 percentage point above the country’s 4.5 percent target.
Traders are betting that policy makers will raise the benchmark lending rate, known as the Selic, by a half-percentage point today for a fourth straight meeting.
“There were expectations that inflation would slow to a more comfortable level, and the market had perhaps been a bit overly optimistic,” Joao Ricardo Costa, the chief economist at Pezco Microanalysis in Sao Paulo, said in a telephone interview.
“Our expectation is the central bank will raise the Selic to 10 percent this year.” The annual inflation rate dropped to 5.86 percent in September from 6.09 percent the prior month, the statistics agency reported today. The median forecast of economists surveyed by Bloomberg was 5.85 percent.
The central bank’s target range is 4.5 percent plus or minus 2 percentage points. Since April, the central bank has increased the benchmark lending rate by 1.75 percentage points to 9 percent, the most among 49 major economies tracked by Bloomberg.
‘Bank’s Objective’
“The central bank’s objective will be to anchor longer-term outlooks in Brazil, which is why it will tighten more severely in the short term,” Andre Perfeito, the chief economist at Gradual Investimentos in Sao Paulo, said in a research note to clients.
The government will remain alert to make sure inflation doesn’t “disturb” Brazilian consumers again, Finance Minister Guido Mantega told reporters in Brasilia. Shorter-term swap rates rose yesterday after Petroleo Brasileiro SA’s Chief Executive Officer Maria das Gracas Foster said in Sao Paulo that the state-controlled oil company may raise gasoline prices this year.
Edison Lobao, Brazil’s minister of Mines and Energy, told reporters in Brasilia today that no decision has been made on a possible increase.
The International Monetary Fund said in a report yesterday that inflation persists in Latin America’s largest economy and threatens to damp consumption, making interest-rate increases “appropriate.”
The fund kept its economic growth forecast for Brazil this year at 2.5 percent while reducing its 2014 estimate to 2.5 percent from 3.2 percent.
bloomberg.com
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