BRASILIA: Brazil's annual inflation rate fell more than expected in mid-July to the lowest in 18 years, piercing the lower bound of the official target range and bolstering expectations of another deep interest rate cut by the central bank next week.
The IPCA-15 consumer price index fell to 2.78 percent in the 12 months through mid-July, down from 3.52 percent in mid-June and below expectations in a Reuters poll for a rate of 2.87 percent, statistics agency IBGE said on Thursday.
Consumer prices dropped 0.18 percent in the month to mid-July, down from an increase of 0.16 percent in mid-June, IBGE said.
Yields on interest rate futures were down, indicating traders added bets on a 100-basis-point interest rate cut on July 26. The move would take the benchmark rate to 9.25 percent from 14.25 percent in October, offering relief to an economy just emerging from its worst recession on record.
The government targets inflation at 4.5 percent, with a tolerance range of 1.5 percentage point. Brazil had overshot its goal by a wide margin for years because of a sharp increase in public spending. In early 2016, inflation nearly hit 11 percent.
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