Yields on Brazilian interest-rate futures contracts rose on speculation the government will approve a request for a fuel price increase by state-controlled oil company Petroleo Brasileiro SA.
The real rose against the dollar for a second day after the Federal Reserve extended its Operation Twist program to replace short-term bonds with longer-term debt.
“Petrobras is doing what it should do, which is request an adjustment,” said Flavio Serrano, s senior economist at Banco Espirito Santo de Investimento in Sao Paulo. “The government could take advantage of this moment of more controlled inflation to implement an increase.”
The yield on the interest-rate futures contract due in January 2014 increased five basis points, or 0.05 percentage point, to 8.08 percent. The real appreciated 0.2 percent to 2.0258 per U.S. dollar.
Petrobras will recommend fuel price increases of 15 percent in its business plan, which will be released June 25, O Estado de S. Paulo reported, citing people it didn’t identify. Petrobras plans to invest $236.5 billion by 2016, according to the newspaper.
Petrobras declined to comment on the report in an e-mailed response to questions. Its shares rose 1.3 percent to 19.90 reais in Sao Paulo trading.
“An adjustment in fuel prices wouldn’t cause any problems this year, but it could push inflation expectations above 6 percent for 2013,” said Italo Lombardi, an economist at Standard Chartered Bank, in a phone interview from New York.
In the U.S., the Fed lowered today the central tendency estimate for 2012 gross domestic product growth to 1.9 percent to 2.4 percent from 2.4 percent to 2.9 percent in April.
The Fed will expand its program to replace short-term bonds with longer maturities by $267 billion through the end of the year to reduce unemployment and protect the expansion.
Policy makers led by Fed Chairman Ben S. Bernanke are taking steps to shore up the world’s largest economy as faltering growth leaves it vulnerable to fallout from the European debt crisis and looming fiscal tightening in the U.S.