June 23, 2017 / 12:50 PM / a year ago

Brazil's central bank chief faces growing bets for bold rate cut -paper

BRASILIA, June 23 (Reuters) - Thursday’s drop in Brazilian interest rate futures suggests most investors now expect the central bank to keep up the pace of monetary easing next month, its president, Ilan Goldfajn, said in a newspaper interview.

Valor Econômico said on Friday that Goldfajn reiterated that interest rate decisions, including the next one scheduled for July 26, depended on several variables, such as inflation expectations.

He said recent data corroborated the scenario the central bank had prior to the political crisis that erupted in late May with the corruption investigation against President Michel Temer. At that time, the central bank had been signaling it would keep or even accelerate the pace of interest rate cuts.

“We have more than a month to watch,” the paper quoted Goldfajn as saying in a phone interview.

On Thursday, the bank lowered its inflation forecasts and reiterated that its next policy decisions depended on upcoming economic data, indicating it was still unsure whether to reduce the pace of interest rate cuts in July.

At 10.25 percent, the benchmark rate is down from 14.25 percent in October. Brazil is slowly emerging from a two-year recession, and lower interest rates are expected to speed up the recovery by encouraging investments and consumption. (Reporting by Silvio Cascione; Editing by Lisa Von Ahn)

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