Brazil’s swap rates fell as signs of faltering industrial output spurred speculation that the central bank will keep borrowing costs at a record low to support the economy even as inflation accelerated.
Brazilian consumer prices rose at the fastest pace in nine months in January on higher transport, food and drink costs, reinforcing bets the central bank will miss its year-end inflation target as the economy rebounds.
Brazil’s swap rates rose after the central bank said government efforts to revive growth through tax breaks and increased expenditures have stoked inflation, damping speculation borrowing costs will be further reduced.
Brazilian consumer prices rose less than economists expected through mid-February, taking the mid-month inflation rate below 6 percent for the first time since December 2010. Interest-rate futures yields fell, as traders increased bets on rate cuts.