Brazil Bank Says It’s Impossible for Rate Decisions to Leak

Brazil’s central bank denied that anyone could have prior knowledge of its decisions after newspapers reported that Brazil’s securities regulator is investigating “atypical” movements in interest-rate futures contracts ahead of a surprise Aug. 31 rate cut.

The bank said it’s “impossible” to learn of decisions in advance because they are taken in a closed meeting by the board and then immediately communicated to the public, according to an e-mailed statement today.

Rio de Janeiro-based O Globo newspaper reported Oct. 15, citing a person it didn’t name, that the regulator is investigating because “two or three” unidentified banks changed their position to bets that policy makers would cut rates in the days prior to the meeting. Other newspapers, including O Estado de S.Paulo, also said an investigation is in progress.

The securities regulator declined to comment in an e-mailed statement. “The regulator follows these movements regularly, and doesn’t comment on investigations in progress,” the agency said in reply to e-mailed questions sent to its press office.

Policy makers cut the benchmark interest rate half a point to 12 percent at their August policy meeting, citing a “substantial deterioration” in the global economy. The move surprised the 62 analysts surveyed by Bloomberg, who had all forecast the bank would leave rates unchanged.

To contact the reporters on this story: Andre Soliani in Brasilia at asoliani@bloomberg.net; Matthew Bristow in Brasilia at mbristow5@bloomberg.net

To contact the editor responsible for this story: Joshua Goodman at jgoodman19@bloomberg.net