Brazil’s swap rates extended their weekly drop to the biggest since September as slower than forecast inflation added to speculation that the central bank will limit further increases in borrowing costs.
Brazil’s consumer prices in 2013 exceeded every analyst estimate and accelerated from last year, boosting pressure on the central bank to extend the world’s biggest cycle of raising interest rates. Swap rates increased.
Brazilian President Dilma Rousseff said the government is striving to bring inflation back to the 4.5 percent midpoint of its target, reinforcing bets the central bank will continue to raise borrowing costs.
Yields on Brazilian interest-rate futures contracts dropped for a third day on speculation the European debt crisis will prompt policy makers to make deeper cuts to the benchmark rate at the two-day monetary policy meeting beginning today.