August 1, 2019 / 1:42 PM / a year ago

Brazil currency, interest rate futures drop on Copom rate-cut decision

SAO PAULO, Aug 1 (Reuters) - Brazil’s currency and interest rate futures opened lower on Thursday, a day after the central bank kicked off an easing cycle with a sharper rate cut than most economists expected, while stocks rallied on the outlook for more stimulus ahead.

The bank’s monetary policy committee, known as Copom, cut the benchmark rate by 50 basis points to a record low 6.00% on Wednesday evening.

Most economists in a Reuters poll had predicted a 25-basis-point cut. BR/INT

The U.S. Federal Reserve also lowered its policy rate after some Brazilian financial markets closed on Wednesday, but played down the chances of a string of additional rate cuts, which boosted the U.S. dollar.

Brazilian interest rate futures fell across the board on Thursday morning and the local currency, the real , weakened about 0.4%.

Economists at Sao Paulo-based brokerage H.Commcor flagged in a note to clients a likely “upward adjustment of the dollar against the real amid a narrowing in the interest rate spread.”

The benchmark Bovespa stock index rose 1.0% in early trading, as expectations of sharply lower borrowing costs and recovering economic activity lifted shares of Brazilian firms. (Reporting by Lais Martins Writing by Brad Haynes Editing by Susan Thomas)

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