SAO PAULO: Yields on Brazil's interest rate futures contracts jumped on Thursday as investors bet the central bank would raise its benchmark rate in January amid dissent among policymakers over how to battle the country's stubbornly high inflation.
Two of the eight members of the central bank's monetary policy committee voted for a 0.50 percentage point rate hike late on Wednesday, in a rare sign of dissent. Brazil's inflation rate is near 10 percent despite a deep recession.
The central bank also removed from its statement a previous reference to the need to keep rates on hold for some time to bring inflation back to the official 4.5 percent target.
"It's agreed ... that keeping rates at 14.25 percent for long is not the recommended strategy anymore, and the dissenters believe the central bank has fallen behind the curve," said Juliano Ferreira, strategist at the Icap brokerage in Sao Paulo.
Contracts maturing in January 2017 paid a yield of 15.55 percent, up from 15.27 percent on Wednesday.
Shares of Grupo BTG Pactual SA, which plunged 21 percent on Wednesday, their biggest drop ever, fell another 2.3 percent on Thursday. Investors remained cautious after the arrest of the bank's chief executive and controlling shareholder as part of a sweeping corruption investigation.
Nevertheless, the country's benchmark Bovespa stock index inched up 0.4 percent. The Brazilian real retreated 0.3 percent, while Latin American currencies seesawed in thin trading volumes due to the Thanksgiving holiday in the United States.
Comments
Comments are closed.