UPDATE 2-Brazil central bank rules out interest rate cut for now
(Adds analysts' comments, market reaction and context)
By Alonso Soto and Silvio Cascione
BRASILIA, July 24 (Reuters) - Brazil's central bank signaled on Thursday it is unlikely to cut interest rates any time soon and instead is focused on curbing naggingly high inflation even as the economy flirts with recession.
In the minutes of its last policy meeting, the bank stressed that interest rates at current levels should help ease inflation in coming years. The comments quashed market speculation that a rate cut could be on the horizon, sending interest-rate futures higher.
The bank kept its benchmark Selic rate on hold at 11 percent for the second straight time last week, but surprised markets by not clearly spelling out its next policy moves, as it normally does.
That uncertainty and the risk that the Brazilian economy could already be in recession prompted some investors to bet the central bank would loosen policy.
In the minutes, the bank ruled out slashing borrowing costs for now.
"The committee anticipates an outlook of resistant inflation in coming quarters, but keeping monetary conditions stable - that is, taking into account a strategy that does not include a reduction of the monetary policy instrument - tends to get (inflation) in the path of convergence toward the goal," the bank said in the minutes.
Yields paid on Brazil's interest-rate futures contracts <0#2DIJ:> jumped higher on Thursday after the release of the minutes. Continuación...