Brazil’s central bank signaled it will continue to cautiously cut interest rates to bolster a sluggish economy, as Europe’s debt crisis worsens and inflationary risks remain low. Interest rate futures fell.
Brazil’s swap rates climbed to a one-week high as an unexpected drop in the August unemployment rate added to speculation that the central bank will sustain the pace of increases in borrowing costs to curb inflation.
Brazil’s swap rates climbed as Finance Minister Guido Mantega said the government will do whatever it takes to fight inflation and signaled an interest rate increase is an option, boosting bets policy makers will raise borrowing costs to control price gains.
Brazil’s swap rates climbed as U.S. employment gains prompted traders to step up wagers that the South American country’s central bank will seek bigger increases in borrowing costs as it tries to contain inflation.
Brazil’s economy grew at its fastest pace in 19 months in November, reversing a three-month contraction, as a recovery in consumer spending helped the world’s second-largest emerging market shrug off a global slowdown. Yields on interest rate futures rose.