Brazil Rate Futures Yields Fall to 4-Month Low on Inflation, Bank Decision

Yields on Brazil’s interest-rate futures contracts fell to the lowest level in four months as the central bank left its benchmark interest rate unchanged and inflation in the city of Sao Paulo was less than forecast.

The yield on the contract due in January fell three basis points, or 0.03 percentage point, to 10.66 percent at 9:25 a.m. New York time, the lowest level since April 16.

Brazil’s central bank left its benchmark interest rate unchanged at 10.75 percent, signaling it may keep borrowing costs steady for the rest of the year as inflationary risks subside.

“The statement left it implicit that the external environment continues to reduce inflationary risk for Brazil,” said Luciano Rostagno, an analyst at CM Capital Markets Ltda. in Sao Paulo.

Brazil’s FIPE Consumer Price Index rose 0.17 percent in August, compared with a median estimate of 0.23 percent in a Bloomberg survey of economists, according to data from the Foundation Economics Research Institute in Sao Paulo.

The real gained 0.3 percent to 1.7410 per dollar, from 1.7460 yesterday.

To contact the reporters on this story: Gabrielle Coppola in New York at gcoppola@bloomberg.net

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