Brazil Rate Futures Rise on 2012 CPI Projections; Real Gains

Yields on Brazilian interest-rate futures contracts rose after economists increased their expectations for inflation next year for the first time in a month.

Yields on the contracts due in January 2012 climbed one basis point, or 0.01 percentage point, to 12.41 percent at 9:41 a.m. New York time. The real strengthened 0.4 percent to 1.5911 per dollar, from 1.5970 on June 10.

Analysts predict consumer prices will rise 5.13 percent next year, compared with a 5.1 percent forecast the previous week, according to the median estimate in a June 10 central bank survey of about 100 economists published today. Central bankers raised the benchmark lending rate 25 basis points last week to 12.25 percent, keeping a pledge to raise borrowing costs for a “sufficiently long period” to bring inflation back to their target in 2012, according to a statement accompanying the June 8 decision.

“Everyone thinks we have more inflation ahead,” David Rocha, a fixed-income trader at Renascenca DTVM Ltda, said in a telephone interview from Sao Paulo. “We’re going to wait for the minutes to see how ‘sufficiently long’ the monetary tightening will be.”

Policy makers are scheduled to release the minutes of last week’s meeting on June 16. Consumer prices rose 6.55 percent in the year through May. The central bank aims to slow inflation back to the mid-point of its target in 2012. The government targets inflation of 4.5 percent, plus or minus two percentage points.